Repayment holiday is a term that can relate to your personal loan, in ways you would never know. Although it is not available as an option for every loan, wherever possible, repayment holiday can reduce one’s burden of payment to half. Provided for certain loan types including an instant personal loan, repayment holiday or forbearance allows a borrower to take a break from the repayment of the same for a specific period. The best part is that it will not let your credit rating face damage.
So, before going through how to apply for the repayment holiday, you must know about its features, the basic criteria and approval processes. Generally, the option is offered by very few lenders. You will have to communicate with the lender for the same at the time of the loan approval. You must be very clear and careful to note the time during which you can avail this option, and decide how many months of break you are liable for. The feature is provided to make the process of repayment easier for the borrowers and hence, you must be aware of requirements and the formalities involved.
How a repayment holiday can be used?
Life can be full of ups and downs and most people need a loan to assuage ill effects of any sudden. Be it purchase of a house, marriage or medical expenses, there is no better financial assistant than a loan. Moreover, the availability of an instant personal loan has made the life of people easier than ever. Although people generally opt for an instant personal loan during an immense crisis, the scenario may occur where people may face issues later, with the repayment of course. However, due to the lack of time to plan things properly, debt would feel like a burden. This is when a repayment holiday can be considered, provided that your lender includes this feature.
So, here are a few points that you must be aware of if you want to avail such an option-
Type of loan: Notably, a repayment holiday cannot be applied for all loan types but for the unsecured loans. The lender of an instant personal loan can provide this feature as per their norms. Moreover, some home mortgages or equity loans may also include repayment holiday options or part of it.
When it can be applied: The option for a repayment holiday can be applied at the beginning for certain types of loan. However, the borrower must ensure that the lender allows the application of repayment holiday in the initial months or the beginning of the tenure. Other than this, you can also apply for the option during the tenure of the loan period.
Basic tenure to qualify for repayment holiday: There are a few terms and conditions one will have to comply in order to avail the repayment holiday facility. Although you can ask your lender to provide the option as per your requirement, the lender, on the other hand, will check for your eligibility. This includes an instalment to be paid for six consecutive months at least, in order to qualify for the repayment holiday facility. Hence, in order to avail it, you will have to be consistent with at least six months of EMI.
Other basic facts: There are several chances one can qualify for the repayment holiday. But one may also fail to avail the opportunity. As mentioned earlier, the borrower will be required to be consistent with the monthly EMI payments before applying for repayment holiday, failing to which, the borrower will be disqualified.
The option to avail the repayment holiday depends on the lender only. In addition to that, one must also take care of the need for applying this option because taking it casually may affect you in the long run. So, ensure that you really require a repayment holiday before opting for the same just because your lender is offering it. Here are the few reasons why you must consider the repayment holiday facility-
1. Unexpected financial crisis
A financial crisis is something that one cannot predict and it can hit despite all proper planning. So, in case you have a loan running and you are facing an issue with the payment of forthcoming EMIs, the option of repayment holiday is probably the best you can go for. Make sure you plan and take care of the timeline before you apply for it.
2. Other expenses
There are some expenses which cannot be ignored and done away with. So if you have any such pending expense and you wish to take a break from your monthly instalment payments to take care of the former, opt for a repayment holiday.
Although the repayment holiday is one of the most needed perks that all types of loans should possess, the option is available for an instant personal loan and others such types which are not approved based on collateral. You can also discover more about instant personal loans and whether it includes the feature or not.