Personal Loan Deferment

Personal loans are installment loans that you can use for various purposes. If you can’t afford your monthly payment, however, you may be able to get some relief in the form of a deferment. 

Personal loan deferment allows you to delay one or more monthly payments without incurring late fees or damaging your credit score. The lender will typically tack the deferred payments onto the end of your loan term. You may consider this option if you’re experiencing financial hardship, and some lenders may even offer periodic deferment as a loan feature. 

That said, there’s no guarantee that a lender will grant a deferment request, and there may be some additional costs to consider before you proceed. But if you’re experiencing emotional stress due to your financial situation, any relief can lighten the burden a little. Here’s what you need to know.

Can you get a personal loan with deferred payment?

If you’re considering applying for a personal loan but don’t want to start making payments immediately, you may be disappointed. While the first payment due date can vary by lender, none offer long-term deferment like a college student would get with student loans.

As you shop around and compare personal loan companies, you can look for lenders that offer more time before your first payment is due. Here are a few examples:

Lender	First payment due
LendingClub	One month after disbursement
Prosper	One month after disbursement
SoFi	30 days after disbursement
Upgrade	One month after disbursement
Upstart	20 – 40 days after disbursement

While most lenders have a strict policy with little variation, your first due date may still vary depending on your disbursement date. For example, some lenders may opt for a later due date if your loan is disbursed toward the end of the month. 

But in general, don’t expect more than a month with most lenders. If you need to defer a payment longer than that, you may consider a personal line of credit, which may offer a lower minimum monthly payment during your draw period.

You could even consider a credit card with an introductory 0% APR promotion, which can sometimes give you up to 21 months of no-interest minimum payments.

Can I defer my current personal loan?

If you’re currently making payments on a personal loan, you may be able to request a deferment in certain situations. 

First and foremost, personal loan companies may offer deferment if you’re experiencing financial hardship. Eligibility criteria can vary depending on your situation. In general, though, here are a few of the requirements you may need to meet:

• Financial hardship: With this type of deferment, you typically need to provide evidence of your financial hardship. This could include confirmation of unemployment benefits, recent medical bills, or military orders for active-duty service.
• Time since disbursement: You may need to have made a minimum number of payments on the loan before you can submit a request.
• Employment: Some lenders may not offer certain types of deferment to self-employed borrowers. 

Deferment periods could range from one to several months, depending on your lender and financial needs. You may also run into a cumulative deferment limit on your loan for long-term financial challenges. 

The other type of personal loan deferment is more flexible. Lenders typically call this program a skip-a-payment program. Lenders may allow you to skip a payment up to a couple of times yearly for any reason. You may consider this option if you have an unexpected bill or expense.

To qualify for this type of deferment, you typically must be caught up on your monthly payments before submitting your request. You may also need to wait three to six months between requests.

How to defer a personal loan

The personal loan deferment process can vary depending on your lender. In general, though, here are some steps you can take to get the relief you’re looking for:

1. Contact your lender: Some lenders may allow you to submit a deferment request online, but it’s best to start by calling your lender’s customer support team. That way, you can discuss your situation in detail and potentially explore multiple options for relief.
2. Provide supporting documents: If you’re applying for deferment due to financial hardship, your lender will likely ask you to provide some proof, such as a copy of an unemployment check or recent medical bills. The representative helping you will explain how you can submit these documents.
3. Wait for a decision: Most personal loan companies don’t publicly disclose how long it takes to approve a deferment request—Upstart is one exception, stating that you’ll get a response within 10 business days. Ask the representative you’re working with when you can expect a decision. If you have a payment before then, ask if your lender offers a grace period before charging a late fee. 

Ask the expert

Chloe Moore

CFP®

Contact your lender immediately if you’re struggling to make personal loan payments. They can work with you on options to defer your loans so your credit is not negatively impacted. I also recommend finding ways to reduce expenses where you can and look for ways to earn more income. These actions can give you the breathing room you need to catch up. 

How much does personal loan deferment cost?

Regardless of your reasons for requesting relief, personal loan deferment can increase the total cost of your loan. However, the actual costs you face will depend on the type and length of deferment, as well as your loan terms.

Financial hardship deferment

If you’re applying for deferment due to financial hardship, there’s typically no upfront fee involved. However, interest will continue to accrue on your loan balance during the deferment period. 

There are a couple of ways a lender can handle this additional cost:

• Capitalize the interest: At the end of your deferment period, your lender may add the accrued interest to your principal balance. This can result in a slightly higher monthly payment for the remainder of your loan’s term. It’ll also result in more total interest charges because you’re effectively paying the capitalized interest.
• Pay during deferment: Some lenders may allow you to make interest-only payments during your deferment period to avoid having the accrued interest change your monthly payments later.

For example, you have a $10,000 loan balance with a 12% interest rate, a four-year repayment term, and a $263.34 monthly payment. 

With a three-month deferment, you’ll accrue $298.06 in interest. If your lender capitalizes the interest and adds it to your balance, it’ll increase your monthly payment by $7.98, and you’ll end up paying $673.09 more in total interest charges.

However, if you pay the accrued interest during your deferment period—roughly $99.36 per month—your monthly payment will stay the same, and you won’t end up paying interest on top of interest.

Skip-a-payment deferment

Because a skip-a-payment deferment program is generally more a convenience than a financial need, lenders will typically charge an upfront fee—$25 is common. 

Still, some lenders may charge more or less than that. This fee is usually withdrawn from your bank account rather than added to your loan balance.

In addition to the upfront fee, you’ll also have to pay the interest that accrues during the month you didn’t make a payment. Talk to your lender about how to handle that charge. 

Pros and cons of a personal loan with deferred payments

If you’re considering requesting a personal loan deferment, it’s essential to consider the benefits and potential drawbacks. Here are some to consider.

Pros

• Can provide some relief

  If you’re experiencing financial hardship, deferring personal loan payments could give you some breathing room to make sure your basic needs are being met.
  

• Typically won’t hurt your credit

  Your lender may add a notation to your account on your credit reports, but an approved personal loan deferment won’t negatively impact your credit score.
  

• Can prevent worse consequences

  While deferring loan payments can increase your costs, it can stop your loan from becoming delinquent or even entering default. Both situations can result in additional fees and damage your credit score.

Cons

• Can be costly

  You’ll have to pay extra interest charges and potentially an upfront fee. If your lender capitalized your accrued interest, you’ll end up with even more interest charges over the life of your loan.
  

• Changes your loan terms

  Your lender will typically extend your loan term by the length of your deferment period, and it may also increase your monthly payment, which can create additional financial problems.
  

• Not a long-term solution

  Personal loan deferment may only be available for up to a few months. If your financial situation is still in poor shape when you’ve reached your maximum, you may be forced to consider other options.

Alternatives to personal loan deferment

Personal loan deferment offers temporary relief, but it’s not the only route to take when facing financial adversity. Several other alternatives exist: consolidate or refinance your loans, earn extra cash, seek help from other financial institutions, and borrow from friends and family.

Consolidate or refinance your loan

In contrast to personal loan deferment, loan consolidation or refinancing helps to manage multiple debts. It replaces your loans with a new one, ideally at a lower interest rate. Keep in mind this might extend the loan term.

Earn extra cash

Another option is to increase your income. This may involve finding a side job, freelancing, or selling items you no longer need or use. It requires effort, but the advantage is that it adds to your income rather than delaying repayment.

Contact other financial institutions

Exploring other financial institutions might provide better loan terms or assistance programs than your current lender. Switching might involve paperwork, but it could result in lower interest rates or more flexible repayment terms.

Ask friends and family

Borrowing from friends or family offers flexibility and potentially fewer financial costs. It differs from the impersonal nature of a loan deferment. However, lending within personal relations can be risky and strain relationships if not managed properly.

Ask the expert

Chloe Moore

CFP®

It can hurt your credit if you cannot pay your debts on time. Having bad credit can affect multiple aspects of your life, including your ability to get a loan in the future, rent an apartment or house, connect utilities without a deposit, qualify for favorable insurance rates, and secure employment, among other things.

FAQ

How can I qualify for a personal loan deferment?

To qualify for a personal loan deferment, you may need to demonstrate a change in your financial circumstance due to an unforeseen event, such as losing a job, sudden healthcare expenses, or a natural disaster. 

It’s crucial to contact your loan provider to inquire about eligibility requirements and provide proof of your situation.

How does applying for a deferment affect my credit score?

Applying for a personal loan deferment can impact your credit score. If your lender reports deferments to credit bureaus as missed payments, it could lower your score. However, your credit score may not be affected if reported as a special agreement. 

Always discuss with your lender how it reports deferments.

Can I make partial payments during the deferment period?

Yes, you may choose to make partial payments during the deferment period. While not required, this can help reduce the total debt and demonstrate good faith toward repayment, which may benefit future transactions with your lender.

Does interest accrue on my loan during deferment?

Interest usually continues to accrue on personal loans during deferment. However, the specifics depend on your loan agreement and lender’s policies. Be sure to understand the terms before agreeing to a deferment.

How long can I defer my loan payments?

The length of personal loan deferment can vary based on lender policies and loan agreements. Deferment periods can range from a month to a year or longer. It’s crucial to discuss the terms with your lender.

What happens if my deferment request is denied?

If your deferment request is denied, you must continue repayments as agreed. If payment remains challenging, consider alternatives, such as loan refinancing or speaking with a credit counselor.