Understanding Your Loan Deferment
At first glance, a loan deferment is a saving grace for those struggling under steep financial strain.
And yes, it is true that these can be true leg up in a time of need. However, you’ll want to have a full understanding of what taking on a loan deferment means.
First, keep in mind that deferment means just that: the payments are deferred to a later date. Now, one may think this means that payments will resume as normal when this date occurs. However, that may not always be the case. Your loan provider has full decision making power when it comes to how and when you’ll be tasked with repaying your deferred debt.
Loan Term & Interest
Next, you’ll want to consider how taking a deferment will affect the overall loan term. Yes, your payments will be on pause. However, once they kick back up, that doesn’t mean the payments you avoided disappeared. Instead, you’ll still be responsible for them, and this will likely result in your loan term being extended. So if you were on a 30 year plan set to end by 2022, and you deferred payment for a year, now your plan will end in 2023.
Also, it’s up to the loan provider whether or not you’ll have to pay interest on your deferred payments. If they require it, you’ll see that balance added to the final months of your loan term. Be careful, as those figures can add up quickly. Also, keep in mind that a deferment will show up on your credit report. That means that other potential lenders will have a full view of your struggle to meet those payments, and as such may use that as a basis to deny you.
Using Affinity Bank
Regardless of where you are in your loan journey, Affinity Bank can help. Contact us today to learn what your options are with us.