You may take out a loan and find yourself going through a financial hardship, whether it’s a job loss or unexpected medical bills you have to pay. If so, payment deferment may be an option that can give you a temporary break from making a payment on your loan. Here’s what you need to know about payment deferments.
How do deferred payments work?
If you face financial hardship and can’t repay your loan, your lender may approve you for a deferred payment. This will allow you to delay a payment on your loan for a short period of time. While some lenders will continue to charge you interest during deferment, others will not.
Payment deferment benefits
There are several benefits of payment deferment, including:
You’ll have more money for essential expenses
With a loan payment off your plate, you’ll have more money to cover essential expenses, such as your rent or mortgage, utilities, and groceries. If you’re having trouble paying your bills while you’re going through a financial roadblock, a deferred payment or payment plan can be very useful.
You can avoid late fees
If you’re late on your loan payments and don’t apply for payment deferment, you’ll probably have to pay late fees. While late fees vary from lender to lender, they may be a flat rate or a percentage of the loan amount.
Some lenders offer interest-free payment deferment
If your lender doesn’t charge interest during the payment deferment period, you won’t have to worry about accruing interest during this time. If you’re not sure whether your lender offers interest-free payment deferment, contact them to find out.
How to defer your loan payment
To defer your loan payment, follow these steps:
1. Request a payment deferment
A payment deferment isn’t automatic, so you’ll have to let your lender know you’re interested in one.
2. Wait for approval
Depending on the lender, they may approve your request right away or shortly after you fill out a deferment form. In many cases, the lender will inform you of their decision via phone or email.
3. Read the deferment agreement
Once you’re approved, your lender will send you an agreement. Read it carefully so you understand how the payment deferment will work.
Alternatives to deferred payments
If you can’t make your loan payments but want to consider alternatives to payment deferment, there are other options. You may refinance your loan and trade in your current loan for a new one hopefully with a better interest rate and lower monthly payments. Another option is a modified payment plan that restructures your loan and makes it more affordable with a better interest rate, lower payment, or longer term.
Advance America offers payment deferment on installment loans
With an Advance America installment loan, you can defer payments if you need more time to pay in select states. You won’t incur additional interest and the payment will be moved to the end of your loan term. These perks are available in most states that offer Advance America installment loans. Contact Advance America today to learn more about your payment deferment options.