With the ongoing coronavirus pandemic distress, we seem to be inhabiting a world that was completely unknown to us just a month ago. All of us have been impacted in some way or the other but reality has hit harder for those who have experienced pay-cuts and job losses.
With the ongoing coronavirus pandemic distress, we seem to be inhabiting a world that was completely unknown to us just a month ago. All of us have been impacted in some way or the other but reality has hit harder for those who have experienced pay-cuts and job losses.
The gig economy workers or those with a variable unpredictable stream of income have taken the biggest blow of all. Also, those who work in sectors like aviation and hospitality are more impacted in comparison to those in FMCG or essential goods.
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Though the Reserve Bank of India has announced a three-month moratorium on term loans and credit card dues as a relief measure, one needs to make an informed choice in availing such perks.
Customers must take into account the fact that if they opt for the moratorium, the interest on their loan will continue to accrue, which will lead to increased EMIs or additional installments at the end of their loan, or both. This is why, only those people who have significant cash flow constraints currently, should opt for a moratorium.
Further, it must be noted that the interest burden varies for different loans and credit cards. It is thus, advisable to wisely choose the loan on which the moratorium is to be availed.
So, do not opt for a moratorium if you can arrange the EMI amount. The higher costs involved in terms of moratorium interest isn’t worth the benefit.
Managing your personal finances prudently is extremely critical in these times. In case of insufficiency of funds to meet the multiple loans EMI requirement, one must choose wisely and prioritise payments as below:
While opting for a loan EMI moratorium is one thing, how do you take care of any additional cash requirements that you may have?
The RBI has introduced a cut in cash reserve ratio (CRR), repo rate, and reverse repo rates to help banks tide over their liquidity crisis and enable them to deploy funds for lending. But given the circumstances, banks are bound to be extra cautious in determining who they are lending money to.
In addition to the lending startups which offer micro-loans at a very high-interest rate, let us explore other credit options available to you:
It is important to note that lately most of the households have had almost zero discretionary spending like eating out, shopping, entertainment, or fuel, leading to a significant saving in expenses. It is important to prioritise your expenses, focus on the ones which are an absolute must, and postpone any discretionary ones until the lockdown is revoked.
One must also realise that the world order, economic activity, and above all, our thought processes will change significantly once the current crisis ends. So let us brace ourselves for a new world with rekindled faith.
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