Definition
EMI Moratorium Impact
An EMI moratorium is a temporary pause on loan repayments granted by a lender, but interest usually continues to accrue, increasing the total cost of the loan.
During a moratorium you skip EMIs for a set period, which relieves short-term cash-flow stress. The catch is that interest typically keeps building on the outstanding principal — and often on the unpaid interest too — so the deferred amount is added back, extending the tenure or raising future EMIs. A moratorium is relief, not a waiver.
India saw widespread use of moratoria during the pandemic, and many borrowers were surprised that pausing payments made their loans more expensive overall. If offered one, treat it as a last resort for genuine hardship, understand exactly how the accrued interest will be recovered, and resume payments as soon as you can.
Related terms
- Debt ConsolidationDebt consolidation is combining several debts into a single new loan, ideally at a lower interest rate, to simplify repayment and cut interest costs.
- Pre-EMIPre-EMI is the interest-only payment a borrower makes on a home loan during the construction phase, before the full EMI (principal plus interest) begins on possession.
- EMIAn EMI (equated monthly instalment) is the fixed monthly payment a borrower makes to repay a loan, comprising both interest and a portion of the principal.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.