Moratorium

The moratorium is temporary assistance from paying your monthly installments to the bank or NBFCs. These monthly installments can be from your car loans, home loans, educational loans, or even your monthly credit cards. During this period, the borrower has the choice not to pay EMIs to their lenders. There were no accusations of penalties imposed during this period and the borrower was not subject to a penalty for late payment too.

Usually, the moratorium period for three months. But based on scenarios, the RBI can extend the period for three months.

In March 2020, because of a pandemic, the whole country was closed, people lost their jobs, and the business was closed. RBI announced a period of three months of the moratorium on installments from March 1, 2020, to May 31 2020 due to a pandemic. Three months is very useful because monthly installments are loosened for borrowers. It helped the borrower to take a three-month break from paying their installments to the bank or NBFC. Post Three Months RBI decided to extend the period of the moratorium for three months depending on the bank or NBFC because the Covid situation did not improve.

Pros and Cons of Loan EMI Moratorium

Moratorium on installments

The moratorium can change to be useful or become a weakness for borrowers. Someone must know all the pros and cons of the moratorium before choosing one. Below are the stated pros and cons choose a moratorium.

Pros

The moratorium is a three-month assistance period given to the borrower which makes it very useful for them to survive severe financial pressures from banks or NBFC during difficult testing times. During this period all types of monthly loan installments including your monthly credit cards down for three months giving them enough time to prepare and plan until the next payment period

Cons

Along with the benefits, the moratorium comes with cons as well. It should be noted that the moratorium was only aid three months while to pay installments back to the bank. Simple flowers from three months will be added to the principal amount that increases the rate of interest or term of office. This process makes it longer for borrowers to get into debt.

It should be noted that the moratorium is a choice and someone must choose only if they cannot pay monthly installments under a severe financial crisis. The moratorium is only temporary help for several monthly installments. The principal amount will increase which increases the rate of interest or ownership, making it longer for the borrower to be debt-free. Therefore, the option, the borrower must continue to pay monthly installments that do not interfere with the payment cycle to the Bank and NBFC. We are on Moneymax, guide and help business owners at any time and how they have to or don’t have to choose a moratorium and if there are other ways to choose it and pay monthly installments on schedule.

Business loans without guarantees are loans available without having to promise the guarantee to certain banks or non-banking financing companies. Usually based on the credit feasibility of people who use loans. Unsecured business loans are suitable for business owners who want to expand their business or buy any equipment that does not have liquidity immediately. This is a suitable source of loans because you don’t need valuable assets to promise in return.

There are many reasons why loans without guarantees are very useful for business owners. Some of them are:

  • Faster & shorter process
  • Guarantees / Assets are not needed
  • Suitable for first applicants
  • Freedom to use funds for any reason
  • Increase your credit rating

Guarantees / Assets are Not Needed

This is one of the biggest advantages of unsecured business loans. There is no guarantee that needs to be promised in return for the available loans. This makes it very useful for business owners who do not have valuable assets to utilize loans. This is one of the biggest reasons why a business loan without guarantee works

Faster and Shorter Process

Usually utilizing loans from banks or NBFC can be a complex and long process. But in terms of utilizing loans without collateral, the process is smooth and free because there is no guarantee or asset involved in the lenders. This automatically reduces the process, making it faster and shorter.

Suitable for First Applicants

Business loans without guarantees are very appropriate for borrowers who have used loans for the first time. Because they don’t have a history of their credit scores, it will be relatively difficult for them to get loans from banks or NBFC. In this case, loans without guarantees come to save them.

Freedom to Use Funds

One of the largest losses of secure loans available from the bank is that there is no freedom to use funds according to your wishes. The bank will need a detailed explanation of the use of actual funds. Meanwhile, in the case of loans without collateral, there is no disruption from the lender. You can use funds in any way according to your needs and needs.

Increase Your Credit Rating

A borrower can take advantage of loans without collateral even if the credit score is low. Unsecured loans will not only help them get faster and finer funds but will also increase their credit rating if it pays on time and in monthly installments. This will make it eligible to utilize further loans with high credit ratings in the future.

Other business owners and individuals are doubtful to find business loans without collateral because of many misunderstandings. But loans without collateral can be useful in many ways. We, at Moneymax Guide & educate business owners to raise funds for business.

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