1. What is Moratorium Interest?

Moratorium interest is the interest accrued during a period when loan repayments are temporarily suspended (moratorium period). The lender continues to charge interest on the outstanding principal during this time.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal loan amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Moratorium period (months)

Explanation: The formula calculates simple interest on the principal amount for the duration of the moratorium period.

3. Importance of Moratorium Period Calculation

Details: Understanding moratorium interest helps borrowers anticipate the additional cost of deferring loan payments and make informed financial decisions.

4. Using the Calculator

Tips: Enter principal amount in dollars, monthly interest rate as a decimal (e.g., 0.01 for 1%), and moratorium period in months. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What is a moratorium period?
A: A temporary suspension of loan repayments granted by lenders, often during financial hardships or special circumstances.

Q2: Is interest charged during moratorium?
A: Yes, interest typically continues to accrue on the outstanding principal during the moratorium period.

Q3: How does moratorium affect total loan cost?
A: It increases the total interest paid over the life of the loan, as interest compounds on the unpaid interest during moratorium.

Q4: Are there different types of moratorium?
A: Yes, some moratoriums may have partial interest payments or other conditions. Always check your loan terms.

Q5: Should I opt for moratorium if available?
A: It depends on your financial situation. While it provides temporary relief, it increases your total repayment amount.