There are times throughout the year when you may feel a strain on your budget. Summer can be one of those times as you start to pay for home maintenance, new clothes for the kids, and even just for fun.
Is there a way to pay for these expenses without adding to the monthly debt payments you already have?
There may be.
Have you checked into your options for skipping one of your current loan payments without killing your credit? Talk to your financial institution about Skip-A-Payment options.
Skip-a-payment programs allow you to periodically skip a monthly loan payment when you need some relief in your monthly budget. Not frequently available from banks, credit unions often offer this option at specific times of the year, like holidays or during the summer. Others let you choose when it’s best to use your skip-a-payment option.
Your options can vary by lender, so be sure to talk to your credit union representative to understand your choices. Here’s what you need to know.
- How frequently can you elect to skip-a-payment? Most lenders will limit you to one or two skipped payments per year.
- How do you avoid being reported as delinquent on your loan? If you asked this question, you’re thinking right! Don’t just decide to skip the payment on your own. This will damage your credit and you’ll have a boatload of other issues to deal with that we would need another post to address.
Skip-a-payment programs that don’t adversely impact your credit will require you to arrange this action with your lender. You pay a small fee for the ability to skip your payment without being reported as late on your loan.
- What criteria do you have to meet to qualify to skip a payment? Lenders have different rules. There may be a minimum loan term required to have the option. For example, you may not be able to skip a payment on a loan that was for a term of one year or less.
You also may have to have already made a certain number of on-time loan payments before you can elect to skip one. Some credit unions allow the option on most loans except real estate loans. Others only allow the payment break on fixed, closed-end consumer loans like auto loans and signature loans, and not on credit cards and lines of credit.
In nearly all cases, your lender will require you to be up to date on your loan payments.
- Skipping a payment will lengthen the term of your loan. This may be okay, but just know that while you're getting the benefit of skipping a payment now, you'll need to make that up one day. You're essentially moving this month's payment to the end of the loan.
- Interest will continue to build on your outstanding balance. While you won't be racking up credit card bills this month, you will still have to pay interest based on your current balance. Your last payment will be a little larger, and you will end up paying a bit more in interest during the life of the loan.
- Don’t let a skipped payment affect your good habits. Some people fall out of the habit of making their monthly payments when they choose to skip just one payment. Don’t let this happen to you. Make your payment next month!
Finally, one more word of caution: If you feel like you could use skip-a-payment every month, you may be in financial trouble. That’s the time to talk to your lender for advice on money management, debt counseling, and budgeting tips.
To learn more about how you can skip a payment on a Genisys loan for just $25, read about our Skip-A-Pay program.
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