What is deferred payment of principal with grace period?

Deferred payment of principal with a grace period refers to a financial arrangement where the borrower is allowed to postpone the repayment of the principal amount of a loan for a specified period. During this grace period, the borrower typically only pays interest on the loan, allowing them time to stabilize their financial situation before starting to repay the principal. This arrangement can be beneficial for borrowers facing temporary financial difficulties, as it provides relief while still maintaining the loan. However, it's important to note that interest may continue to accrue during the grace period, potentially increasing the overall cost of the loan.