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How do deferred car payments affect your credit score?

Credit score
A deferred payment is one that is delayed to a later date, usually until the end of your loan term

By Manuel Tovar, August 30 – Hispanic Solutions Group

Most consumers are wondering and today we give you some advice.

A deferred paymentIt is one that is delayed to a later date, generally until the end of the term of your loan. Borrowers in financial distress often take advantage of deferment programs to get through tough times, but how do these deferred payments affect their credit scores? Today we will deal with that topic. Remember that our specialists inHispanic Solutions Group they are ready to give you better financial advice.

Deferred payments are recorded as such to the credit bureaus: As you know, there are three, including TransUnion. For example, during the coronavirus pandemic, accounts were noted if there was forbearance or deferral “using a special code that indicates that the account has been affected by a declared disaster,” as reported by one of the three companies. Even in non-emergency situations, forbearance or deferral accounts are reported as such to the credit bureaus so that “missed” payments do not damage your credit.

Also, since the lender has to agree to the deferment plan, they are not supposed to report late payments to the credit bureaus. Your account must remain current during the deferral period, which is generally between 30 and 90 days, depending on what the lender agreed to and what you qualified for.

If you see late payments being reported even though your car loan is in deferment, contact your auto lender immediately and the credit bureau will report the incorrect activity. You have the right to dispute the inaccurate information reported on your credit reports and have it removed.

You can also file a dispute online with all three credit reporting agencies.

How do auto loan deferrals work? And today we give you some information.

To qualify for a car loan payment deferral Start by talking to your car lender. Lenders often allow deferrals for borrowers experiencing financial difficulties, such as loss of job, license, unexpected medical problems, or other emergency situations.

Nevertheless, if you already missed one or two payments (Default is defined as at least 30 days late), or if you have a late car payment, you probably don’t qualify for a deferral plan. Your lender may also ask you to complete a hardship letter outlining why you need the deferral to see if your circumstances qualify for the break in payments. Not all borrowers in all situations qualify for a deferral plan, but the sooner you contact your lender about your options, the more options you have.

Also, you should know that not all deferral plans stop interest charges. You may need to continue paying accrued interest during the deferral period, so you should check with your lender and review the language in your loan agreement to cover all your bases.

Finally, postponement is not an option?

If deferring your auto loan payments is not an option, then it may be time to get a more affordable auto loan. Right now, trade-in values ​​are very high due to low stock of new cars, and now may be the time to buy your used vehicle for something more affordable.

We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram to find more information related to finances. Also on our YouTube channel The Credit Channel to learn how to improve your credit. If you need help in repairing your credit, disputing debts that do not belong to you, or other services, call us at (612) 216-1599.