Simple Definition
A moratorium period allows delayed repayment or limited payment for a defined period. Interest may still accrue depending on the loan terms.
Why It Matters
Moratorium can reduce immediate cash flow pressure but may increase total interest cost if interest continues to accumulate.
Example
In some education loans, repayment may start after course completion and a defined grace period.
FAQs on Moratorium
Is moratorium interest-free?
Not necessarily. Interest treatment depends on the lender and loan agreement.
Does moratorium extend tenure?
It may extend tenure or affect repayment schedule depending on lender policy.