I just found out that car loan contract allows for one payment deferral meaning that I can skip one payment and pay it at the end of the loan. I wonder if doing this would cause me to pay more money in the long run? I could see this coming in Handy if I find myself low on funds one month as a way to help me get caught up. Have any of you deferred a payment before?
Depends on the terms. For some loans you'll be forced to pay interest during the "grace period." To avoid paying the interest that might accrue, you need to find out if they are going to charge any interest because if they do, you'll end up paying a lot more eventually. While deferring a payment might give you some breathing room, only consider it if you have no options.
You make a great point here about interest and such. I would not want to end up paying more if I could avoid it. I think I would suck it up if I had a situation in which I really needed the car payment money though. I would only use this as a last resort because I want to get my car paid off and not deal with it anymore.
I am guilty of deferring payments. Although I do my best to catch up, there's no guarantee I'd be able to pay my insurance bills on time, every time. When I do pay, I pay in bulk (including the months I wasn't able to cover). They're rather lenient with me because I've been a customer for close to three years now. My provider tries to present other options thinking I may be having a hard time coping up with the rates. The truth is... I'm just too lazy to go to their office and pay at the cashier. I didn't want to be stuck in traffic and the office is unfortunately closed on weekends.
My ex got caught in something like that and lost a lot of money. He paid $1500 down on a car that might have been worth 4k at the time. He paid notes for nearly a year and by this time, I'm seeing the same car (2003 Chevy) for as little as $2500. The next thing I know, hes trying to sell me the car. About a week later, a tow truck is taking the car away. That was the first time I heard about deferred billing on a used car. Some lots will take as much money as they can get from a person.
This is the first time I've heard of that deferred payment. And from what I understand, that particular deferred payment of one installment is the allowance given by the bank. That means you can be late in paying an installment without incurring a penalty. And it is not meant to be availed of since it is only an allowance. Correct me if I'm wrong but that's how we have it here.
I guess if you had other expenses come up you might want to do that. As long as it is a one time thing you would probably be Ok, but if it is a repeated thing the lending company would think you could not afford the car and send the repo people out. It is just one of the things you have to be careful.of doing and make sure you have a solid payment record before attempting to do that, just my two cents.
I posit that deferral would make a loan more expensive. This is because some creditors insist that a certain deferral fee be paid on the basis of the month(s) that you were short of cash. This is not to insinuate that its not convenient, it surely is. Another aspect is that any interest would be calculated on the basis of prevailing levels of inflation which is always on an upward trend.
