The short answer is yes: skipping one car payment can hurt your credit score, but not until it hits a certain mark. One missed payment doesn’t destroy your credit score forever, but it can stay on your credit reports for years.
Also, can I pause my car payments?
Some build the option right into the loan agreement: All you have to do is choose the “skip a payment” option in your payment coupon book or on the lender’s website where you normally make your payments. Other auto lenders ask you to submit a “hardship letter” to get approved for deferment.
Simply so, can you freeze your car loan payments?
Under a car loan deferment, the lender agrees to let you pay a lower payment or no payment at all for a month—or two, or three, but probably not much longer than that—with the expectation that you’ll be able to resume your regular payment schedule after the deferment ends.
Can you skip one car payment a year?
They may allow just one deferment or multiple deferments. The amount of times you can defer your car loan largely depends on the language in your loan contract. Your lender could limit how many times you can defer your loan by year, or by the overall loan term.
Deferred payments do not negatively affect your credit history. Passed in response to the ongoing pandemic, the Coronavirus Aid, Relief and Economic Security (CARES) Act made it possible for those who have been impacted to receive certain payment accommodations, such as account forbearance or deferment.
I Can’t Afford My Car Payment—What are My Options?
- Modify Your Auto Loan.
- Refinance Your Vehicle Loan.
- Trade in Your Car.
- Let Someone Else Assume Your Loan.
- Sell Your Vehicle.
- Turn the Keys In.
- Let Your Car Be Repossessed.
- File for Bankruptcy.
Two or three consecutive missed payments can lead to repossession, which damages your credit score. And some lenders have adopted technology to remotely disable cars after even one missed payment. You have options to handle a missed payment, and your lender will likely work with you to find a solution.
Skipping a payment may also be a good strategy if you are planning to use the money from that payment to wipe out a high-interest debt. Installment loans, such as those for cars, typically have a much lower interest rate than what might apply to a credit card.
There is usually a grace period for car loan payments so you should be fine. I wouldn’t worry about any late fees, and there shouldn’t be any impact on your credit. The grace period should be about a week or two. After that, you will be charged a fee of around $30.
The payment you skip is added later in your loan payment schedule. Skipping a payment doesn’t mean skipping out on interest! Interest still accrues on your account as usual during the skipped payment period and throughout the newly extended life of the loan.
Con — You tack money onto the total cost of your loan.
What many people don’t realize is you still incur interest when you skip a payment, which means the total expense of your loan will end up costing you more than you initially signed up for.