Between recitals, plays, finals, end of the year, taxes, charities, and a host of other obligations and costs, you are stressed. When your lender says that you can skip a payment for the month, it feels like an unexpected present, freeing up the money you have for other things. Before you take your lender or lenders up on that offer, you need to consider the consequences.
Does it come with a fee?
If they are offering to let you miss a payment for a fee, it is not a gift at all. Not only does that money not go to paying down your debt, you are still racking up the interest charges. When you consider the fact that you haven’t made a payment in a month, you end up owing more by your next payment because skipping a payment does not stop the interest charges. Without putting another dime on that credit card or loan, you are now further in debt.
Is a loan offering to let you skip a month?
Initially, it seems like a good idea, but almost all loans have a set time limit until they must be paid off. If you skip this month, that means you are going to be even more strapped down the road, possibly in January, when your minimum payment amount is double. In some cases, they are tacking the skipped payment on to the loan’s duration. While you don’t have to make two payments at once, it means that you will be paying down the loan for a longer period of time, and will end up paying more in interest than you would have originally. If it is for a new car and you are still in the first year or two of the loan, don’t even consider skipping a payment because this is when your interest payments are at their largest.
What is your regular payment routine?
Financial experts have found that skipping a payment usually ends up resulting in accidently skipping a second payment. You pay loans and credit card bills once a month, so it is really easy to get used to not paying them or to forget to pay if you go without paying a month. This will, of course, mean late fees, as well as possibly damaging your credit score. It’s not a fair trade off for a little extra money.
0
0
0
Leave a Reply