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Skip A Loan Payment, But Pay A Price

Some banks and credit unions will charge a fee for skipping a loan payment.If you’re strapped for cash this holiday season, your bank or credit union institution might allow you to skip a loan payment without being penalized.

But that doesn’t mean these offers come without a cost.

The fine print will tell you most of what you need to know: You’ll often pay a fee for this service, and you’ll continue to accrue finance charges during the skipped month, which will make the loan more expensive and take you longer to pay off.

Your best bet is to save in advance for holiday spending.

But if you absolutely need the cash, skipping a loan payment for a month with your financial institution’s approval might be a better bet than running up credit card debt that carries a hefty interest rate.

The absolute worst thing you can do: Just ignore your loan payments (or make them late) for a month, which will carry higher fees and can impact your credit score.

Credit unions are most likely to offer this option.

Most of these deals are available only on certain loans (auto loans appear to be the most common).

But what kind of loans, the fees involved, the frequency you can make such requests and other details vary from one bank or credit union to the next, so you need to be sure to read all the fine print or talk to your customer service representative.

Typically your loans will need to be in good standing to apply for the deferral, and the loan may have had to already be in effect for a set period of time, such as 12 months.

Among some of the current offers:

  • A special deal from Mission Federal Credit Union (www.missionfed.com) in San Diego waives the usual $45 fee if you request a deferral this month. You can make up to two requests per year. Credit cards, loans secured by real estate and lines of credit are among those not eligible for the program. Anyone who lives, works or goes to school in San Diego County can join the credit union.
  • Missouri Credit Union (missouricu.org) in Columbia, Mo., also is waiving its fee in December. Taking part in the Skip-a-Payment program normally carries a $20 fee. While secured loans like auto loans are eligible, real estate loans are not. People who live or work in 10 Missouri counties, or work for a wide range of other institutions, are eligible for credit union membership.
  • Through Jan. 31, Ent (www.ent.com), a credit union based in Colorado Springs, Colo., lets you skip your loan payment for just a $10 fee. The deferral is good only for certain types of loans, such as auto, motorcycle and signature loans. The credit union primarily serves residents in the Colorado Springs and Denver areas.
  • Marine Federal Credit Union (www.marinefederalhb.org) in Jacksonville, N.C., is skipping its regular $20 monthly fee if you defer a payment this month. Mortgages and credit cards are among the types of loans excluded. Military and civilian employees of a number of military bases and businesses are eligible to join the credit union.
  • Michigan State University Federal Credit Union (www.msufcu.org) in East Lansing, Mich., allows you to skip a payment at any time. A $25 fee is charged, and home and business loans are ineligible. The credit union caters to the Michigan State and Oakland university communities, as well as employees of certain area businesses.

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  1. jp20 said:
    on December 9th at 12:18 pm

    Who saves in advance for the holidays? It’s practically un-American