A loan moratorium is a temporary suspension of loan repayment by a borrower. It is often offered by lenders to borrowers who are facing financial difficulties due to unforeseen circumstances, such as a natural disaster or a pandemic. During the loan moratorium period, borrowers are not required to make their regular loan repayments, and no late fees or interest will accrue on their loans.
A loan moratorium is usually granted for a specific period of time, after which borrowers are expected to resume their regular loan repayments. The terms of the loan moratorium, including the duration and conditions, are usually agreed upon between the borrower and the lender.
A loan moratorium can provide much-needed relief to borrowers who are facing financial difficulties and are unable to make their regular loan repayments. However, it is important to note that the interest on the loan may continue to accrue during the moratorium period, and the borrower may have to pay a higher overall amount when the loan repayment resumes. Therefore, borrowers should carefully consider the consequences of availing of a loan moratorium before making a decision.