deferring loan payments during covid

[Anonymous]

hello world, this is my first question here.

i currently have 3 loans in my name:

1) auto loan, medium amount

2) personal loan, medium amount

3) personal loan, small amount

all in good standing, no missed payments. i am able to pay all comfortably.

these loans are all offering payment deferral for current situations.

QUESTION: would deferring payments on loan #1 and loan #2, to pay off loan #3 be a good idea or bad idea?

good:

- i would be able pay off loan #3 in about 3 months, and no longer have this unsecured loan on my report.

- loans #1 and #2 still have over 5 years on their schedule, so 3 months is not a signifcant increase

bad:

- deferral of payments may impact my credit rating (maybe?)

[RadioRob]

A deferral typically just means they don’t report the non-payment as late. It does not stop the balance from accumulating interest. If you have the means to pay, it will cost you less in the long run to do so.

I know the idea of saving some cash and sitting on it might be appealing in these times, but personally I’ve been taking the stance of this is the time to double down on clearing debt.

Why give lenders a reason to think you might not have the financial means and chose to cut your revolving limits or deny you credit should you apply for anything soon.

It won’t tank your score, but it could spook other lenders.

[Anonymous]

thanks for your response.

i wouldn't be deferring payment to sit on cash or invest in anything or go to hawaii.

i would only be doing this to payoff the small unsecured loan completely.

[AlmostNJ]

The only problem would be that you are requesting the lender to defer the payments because you are representing that you do not have the means to pay them. But in reality you do based on your question.  They probably wont find out but is that really what you want to do?

[joeyv1985]

Why give lenders a reason to think you might not have the financial means and chose to cut your revolving limits or deny you credit should you apply for anything soon.

I agree with this RadioBob. I have a friend who did this with a home loan that he bought with his wife about 9 months and I told him, "You're putting yourself on their radar". Why give them the chance? Expecially if you have the means to pay for it. 

[Anonymous]

Somebody posted in the last 24 hours that they had accepted deferment for their mortgage as a safeguard a few months ago (they didn't use the deferment, they just signed up in case it was needed). Yesterday they applied for an Amex BCE and were declined, with Amex citing that mortgage deferment as the only reason for the denial.

Lenders are paying attention to who does and does not avail themselves of deferments. Opting to use it can definitely cost you in other areas.

[Anonymous]

Here's the thread:

https://ficoforums.myfico.com/t5/Credit-Card-Applications/Question-about-being-denied-new-credit-for...