What you need to know about deferring payments for your car
HOUSTON – As many people find out how to pay bills with no income, some may consider asking their lender to put their car payments on hold. Before signing a deferral or forbearance agreement, you should know that there are pros and cons.
Freezing your car loan for one to three months while you look for another job or wait for unemployment benefits allows you to save time and avoid late fees and possible repossession.
Lenders suspend your payments, but the interest on your loan continues to rise. Usually when you start your payments again, your monthly bill is higher due to the extra interest.
“The longer you delay or extend the term of this repayment, the longer the period of time you are going to put upside down,” said Greg McBrid, Chief Financial Analyst at Bankratee. In other words, you are driving a vehicle that you owe more than it is worth. “
McBride said if you know you won’t be able to make your next payment, call your lender and ask if they can help you. Don’t miss a payment.
If you don’t know when you’ll be able to pay for your current vehicle, downsizing may be a better option than freezing your payments and facing a bigger bill. Can you trade in your vehicle for something cheaper?
Return your vehicle or discuss returning the vehicle to the lender instead of repossession.
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