Last week the Reserve Bank of India came out with a slew of measures to help those who have been hit hard by the current Coronavirus lockdown. Amongst the steps announced was a moratorium on loan repayments and change in repo rate. Both the decisions directly or indirectly have an impact on the EMIs you pay on your vehicle loans. The Central bank advised the banks to defer EMIs by 3 months and most banks have by now given the consumers an option for the same. However a closer look at the communications sent out by the banks reveals that you will have to shell out some additional interest if you choose to not pay your car or bike loan EMIs for the next 3 months.
It has been clearly mentioned that interest for these 3 months will be compounded and will be recovered by extending the tenure of the loan. For example consider a case where you've taken a loan for an amount of ₹ 8 lakh and you still have to pay EMIs for 3 years. If you do choose to skip EMIs for the next 3 months you will end up paying an additional interest of around ₹ 25,000 and your loan period will also increase by 4 months. For higher loan amounts or increased tenures this additional interest amount and tenure will be even higher. Any change in interest rate will also mean that you may end up paying an additional amount. A lot also depends on the tenure of your loan and if you can pre-pay your loan.
Illustration of charges on HDFC Bank's website if you opt for moratorium on your vehicle loan
If you want to still go ahead and avail the loan moratorium you have to request your bank for the same. If you do not intimate your bank your EMI will be debited on time. So in conclusion if you can afford to pay your EMIs on time, you should continue doing that. Once the loan moratorium gets over you will have to pay additional interest and your loan period will be stretched too. However banks have clarified that not paying these installments will not affect your credit rating in any way.