Deferring Payments: What You Should Know
If you’re struggling due to the COVID-19 pandemic, then you may have asked to defer your debt payments on your credit cards or auto loans. If so, we have a few recommendations:
Be sure to schedule a reminder of when the payment is due. It can be easy to lose track of what is due and when, so make it a point to write down the dates of when your defereed payments are due. Unfortunately, we see a lot of credit scores drop because people miss a payment after a deferment on accident. Your payment history makes up 35% of your credit score and incurring late payments can be a heavy anchor on your credit score.
Read the fine print. Some companies will continue to charge interest on the loan and add it to your final payment at the end of the term. Some companies waive the interest and extend the term of the loan. Each company is going to have a different policy which can create confusion on the amounts that you have to pay and when. Make sure you understand the consequence of a loan deferment to avoid any surprise fees, interest, or charges in the future.
We hope this helps you navigate the deferment process on your loans. If you have questions, we’d love to answer them for you. You can get more free resources like this on our blog.
Stay safe and healthy!