Updated on June 05, 2024Moratorium: A temporary prohibition or suspension of an activity.
The word “moratorium” comes from the Latin word “moratorium,” which means “staying” or “halt.”
Example sentence: The government imposed a moratorium on all new construction projects.
What does a moratorium mean?
A moratorium refers to a temporary suspension or delay of an activity, such as payments or legal actions. It is often used to provide relief to individuals or businesses facing financial or legal difficulties.
What is a moratorium period?
A moratorium period is a specific time during which the borrower is not required to make loan payments. It is often offered during times of financial hardship, allowing borrowers some relief before resuming regular payments.
What is an example of a moratorium?
An example of a moratorium is when a bank offers a six-month suspension on loan repayments to help borrowers during an economic crisis. During this period, borrowers are not required to pay their EMIs (Equated Monthly Installments).
Is taking a moratorium good or bad?
Taking a moratorium can provide short-term relief by postponing payments, but it may increase the total cost of the loan due to accumulated interest. It can be helpful during financial difficulty but may result in higher long-term financial obligations.
Can I pay EMI during the moratorium period?
Yes, borrowers can choose to pay EMIs during the moratorium period, even though they are not obligated to. Making payments during this time can help reduce the overall interest burden.
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