LOANS · 4 MIN READ
A principal grace period does not mean interest-free
A principal grace period delays principal repayment only. Unless the contract says otherwise, interest continues to accrue on the full outstanding balance.
Why payments rise after the grace period
When the grace period ends, the full principal must be allocated over fewer remaining instalments. If the promotional interest rate also expires, payments may rise sharply because both principal and the rate change together.
Compare the highest payment with household income and run an additional scenario with interest rates above the expected level.