Finance

What is Personal Loan Deferment & Know How It Works?

As the country’s economy is still ailing and small, medium sector businesses have been largely impacted due to the Covid situation, personal loan deferment seems to be a great option and a huge relief to small borrowers.

The government of the country had also announced the moratorium period for the SME and MME sector in their 22nd March announcement until May 2020. However, in the wake of the job cuts, pay cuts and negative growth rate in every sector the RBI had further announced for the loan deferment period to extend until August 31st, 2020.

Further to the above, in light of the present situation where business and salaried people are still struggling with their finances, RBI has announced that the lenders and borrowers, on mutually agreeable terms, can defer the repayment for 2 more years. This step has been taken to provide relief to the borrowers and help them get on their feet.

Definition of Personal Loan Deferment

  • Deferment is a mechanism wherein the lender and borrower, on acceptable terms, “defer” or delay the repayment of the entire loan or selected monthly installments. The deferment can be for an agreed period. This option of deferment would exist for your personal loans as well.
  • A Fullerton India personal loan deferment is a great idea as it would provide you with a much-needed break from your repayment schedule and in these tough times, you can prioritize your funds for the expenditure on the essential items rather than being bogged down by loan repayment.

The Mechanism of personal loan deferment

  • You must remember that any kind of loan deferment has to be on mutually agreed terms. The deferment increases the overall tenure of the loan. For example – if you agree on a 3-month deferment for your next EMI due on 31st October 2020, with the loan ending on 31st December 2020, the deferment would effectively make your next EMI due January 31st, 2020, with the total loan then ending on 31st March 2020.
  • Ensure that the terms for this extended period of the loan need to be discussed in detail with your lender. 

Also Read: Instant Personal Loans: One Solution to all your Financial Needs

Interest and Credit Score

  • A deferment generally only means that there will be no additional charge for the extended timeline. However, the interest would still be accruing for an extended period. In the above example, the next EMI which would be repayable on 31st January 2020 will include the interest charged for the 3-month deferment from November 2020 to January 2020.
  • However, the final decision on whether the interest is to be charged or if there can be any exceptions solely depends on your lender
  • As this arrangement is made with the consent of the lender, the credit score of the borrower is not impacted. The credit score of a borrower is impacted only in a situation where the borrower has missed a payment. A deferment is considered to be a condition where the lender has willingly forgone the repayment and hence it is not viewed as a negative comment on the borrower’s credit.

Personal Loan Benefits with Fullerton India during the Pandemic

  • Considering there is a liquidity crunch in every sector and household, personal loans are the saving grace. The main advantage of a personal loan is that the end-use is not restricted. This effectively means that you can use the loan for any purpose you deem fit. You are also free to use this loan amount to settle your debt cycle.
  • Fullerton India, a leading NBFC in India that offer personal loans to meet all your needs – personal or professional. They were founded in the year 1994 and have become a brand you can trust for all your financial needs. You can avail of a personal loan at competitive rates and up-to an amount of 25 lakhs. 
  • Fullerton India is known for its efficiency, speed, impeccable customer service, and simplified documentation process. Their instant personal loan can also be easily availed online. You can visit the website to understand your eligibility, required documentation, and upload the required papers. Fill out your personal, professional, and income details and their representative will take care of the rest. The process is quick and seamless.

In conclusion,

A personal loan is viable and advisable in liquidity crunch scenarios. The fact that personal loans can even be deferred makes it an extremely advantageous option. Attractive and competitive interest rates also ensure that it is not a strain on your budget. Additionally, Fullerton India with its digital processing and paperless disbursement makes availing personal loans an effortless alternative. However, it is imperative to understand and comprehend the full details and have transparent dealing with the lender. This will ensure that there are no glitches or surprises during the tenure of repayment. Bid goodbye to your financial woes and apply for a personal loan to ease your burden.

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