If you’re facing financial difficulties and are struggling to make payments on time, you may be wondering if your credit acceptance will allow you to defer a payment. The good news is that many credit card companies and lenders do offer deferment options for their clients. By understanding the process of deferring a payment and knowing how to use this option wisely, you can alleviate some financial stress and regain control of your finances.
What Does it Mean to Defer a Payment?
Before we dive into the specifics of credit acceptance deferment, let’s first understand what it means to defer a payment. Simply put, deferring a payment means postponing your due date for a short period of time. This can be helpful if you’re facing a temporary setback, such as a job loss or unexpected medical expenses, and need some extra time to catch up on your bills.
Deferring a payment does not mean that you won’t have to pay it eventually. It simply gives you a brief reprieve from paying on time without incurring any late fees or penalties. Depending on your specific agreement with your credit card company or lender, you may be able to skip a payment entirely or make a reduced payment during the deferment period.
Understanding Deferment Options from Credit Acceptance Companies
Now that we know what deferment means, let’s explore how credit acceptance deferment works. Each credit card company or lender has its own policies and procedures when it comes to deferment, so it’s important to contact them directly to understand your specific options.
Contact Your Credit Acceptance Company
The first step in exploring deferment options from your credit acceptance company is to reach out to them directly. This can usually be done through a phone call or online chat. Explain your situation and ask about the possibility of deferment. Many companies have trained representatives who can provide guidance and assistance in this process.
Understand the Terms and Conditions
Once you’ve contacted your credit acceptance company, they will likely provide you with a deferment agreement. This document will outline the terms and conditions of your deferment, including the length of time for the deferment period, any reduced payments that may be required, and any additional fees or interest that may accrue during the deferment period.
It’s important to thoroughly read and understand this agreement before signing it. Make sure to ask any questions if you’re unsure about any aspect of the deferment.
Determine Eligibility
Not everyone will be eligible for deferment from their credit acceptance company. Each company has its own criteria for determining who can use this option. Some common factors that may affect eligibility include:
- Length of time as a customer
- Payment history
- Current account status
If you’re not eligible for deferment, your credit acceptance company may offer alternative options such as a payment plan or hardship program.
How to Use Deferment Wisely
While deferment can be a helpful tool in managing your expenses, it’s important to use it wisely. Here are some tips to make the most out of your deferment period:
Communicate Openly with Your Credit Acceptance Company
It’s crucial to have open and honest communication with your credit acceptance company during this process. If you’re struggling financially, let them know. They may be able to work with you to find a solution that works for both parties.
Prioritize Your Payments
During your deferment period, it’s important to prioritize your payments. While you may be allowed to skip a payment, it’s still important to make sure your other bills are paid on time. This will help you avoid falling into further financial trouble.
Use Deferment Sparingly
Deferment should only be used as a last resort. It’s not a long-term solution to financial difficulties and should not be relied on frequently. If you find yourself needing to defer payments often, it may be time to reevaluate your budget and expenses.
Examples of Deferment from Credit Acceptance Companies
To give you a better understanding of how deferment from credit acceptance companies works, let’s look at some real-life examples:
Example 1: Credit Card Deferment
John is struggling to make ends meet after losing his job. He reaches out to his credit card company to inquire about deferment options. They offer him a 3-month deferment period, during which he will not have to make any payments. However, interest will continue to accrue on his balance. After the deferment period ends, John will need to resume making payments and will also have to pay off the accrued interest.
Example 2: Auto Loan Deferment
Mary is facing unexpected medical bills and is unable to make her car loan payment. She contacts her lender and is offered a 1-month deferment period. During this time, she will only have to pay half of her regular monthly payment. The remaining amount will be added to the end of her loan term. This allows Mary some breathing room to catch up on her expenses without falling behind on her loan obligations.
Example 3: Mortgage Deferment
Samantha has recently undergone major surgery and is unable to work for a few months. She contacts her mortgage lender to discuss deferment options. They offer her a 6-month deferment period, during which she will not have to make any payments. However, her loan term will be extended by 6 months, and she will also need to pay off the accrued interest during that time.
Comparing Deferment with Other Options
When faced with financial difficulties, there are several options available besides deferment. Let’s compare deferment with two common alternatives:
Deferment vs. Payment Plans
A payment plan involves spreading out your payments over a longer period of time, whereas deferment allows you to postpone a payment entirely. While both options can provide some relief, deferment typically has fewer long-term consequences as it does not affect the length of your loan or credit term.
Deferment vs. Hardship Programs
Hardship programs are offered by many credit acceptance companies and involve renegotiating the terms of your loan or credit agreement. This may include lowering your interest rate or extending your payment term. While hardship programs can offer more significant relief, they also require more paperwork and documentation compared to deferment.
Tips for Using Deferment Wisely
When considering deferment, keep these tips in mind to make the most out of this option:
- Only use deferment as a last resort.
- Communicate openly and honestly with your credit acceptance company.
- Prioritize your payments during the deferment period.
- Use deferment sparingly and only when necessary.
FAQs about Credit Acceptance Deferment
1. Will deferment affect my credit score?
Deferment itself does not directly affect your credit score. However, if you miss payments or fall behind on your bills, it can have a negative impact on your credit score.
2. Can I defer more than one payment at a time?
It depends on your specific credit acceptance company’s policies. Some may allow you to defer multiple payments, while others may only permit one at a time.
3. Are there any fees associated with deferment?
There may be fees or interest that accrue during the deferment period, depending on your agreement with your credit acceptance company. Make sure to read and understand the terms and conditions before signing up for deferment.
4. How long can I defer a payment for?
The length of time for deferment varies depending on your specific agreement. It can range from a few weeks to several months.
5. Can I defer payments indefinitely?
No, deferment is not meant to be a long-term solution. It should only be used temporarily and sparingly.
Conclusion
If you find yourself struggling to make payments on time, remember that deferment may be an option. By communicating with your credit acceptance company and understanding the terms and conditions of deferment, you can use this option wisely and avoid further financial stress. However, it’s important to also consider other alternatives and use deferment sparingly to maintain control of your finances in the long run.
