Recently SBI has launched an online portal to facilitate the restructuring of its retail loans to customers. The loan restructuring facility has been introduced keeping in mind the borrowers who are going through the money problem in the COVID 19 epidemic and are not able to repay their loan on time.
It is very important to decide carefully about the restructuring option of home loan, education loan, automobile loan or personal loan. There may be some financial aspects of this, which can spoil the finances of the borrower later. Here some serious things are being mentioned, which need to be kept in mind while taking loan restructuring option.
Has complete clarity about the terms applied in the restructuring plan?
Along with knowing whether or not you are eligible for loan restructuring, also find out how long you can postpone the repayment of your loan, what will be the additional cost on that; The recalculated EMI amount, the repayment period and the estimated interest will be formed. To qualify for the Moratorium, you must show that your income has been affected by the epidemic.
According to SBI, salaried employees will have to show salary slips or account statements to prove salary cuts or suspensions or job losses during the lockdown. At the same time, self-employed borrowers will have to give a declaration, which shows the closure or decrease of business activity in lockdown. Only those loan accounts in SBI are eligible for restructuring, which were present in the bank’s books till 1 March 2020.
SBI also says that loan restructuring facility is available only on housing and other related loans, education loans, vehicle loans (other than commercial use) and personal loans. The loan can be applied for restructuring by 24 December 2020. The loan must be a standard loan and the default should not exceed 30 days by March 1, 2020. SBI has said that eligible borrowers can be offered moratoriums or installments of up to 2 years of duration. The extension in the loan repayment period will be equal to the duration of the moratorium i.e. 2 years.
Factor in the cost of loan restructuring
It is very important to understand that taking a moratorium and restructuring plan does not mean that you are exempted from debt repayment. In both these options, interest will be charged even during the EMI deferment.
SBI has said that if the borrowers choose loan moratorium or restructuring, they will have to pay an additional interest of 0.35 per cent over the current pricing for the remaining period of the loan. This is to compensate for the partial cost of additional provisions made by the bank. This additional interest will increase the total estimated interest payment on the customer.
Therefore, it is important for the borrowers to calculate how the restructuring plan will affect their loan burden. If choosing loan restructuring, the customer should have a bounce-back plan to repay additional interest as soon as possible.
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