What Are the Three Most Common Reasons for Granting a Loan Deferment?
The granting of a loan deferment can help postpone loan payments for a specific period of time because of personal circumstances that may prevent you from being capable of making a payment. Many lenders require that certain criteria be met before they will grant a deferment on a loan. The most common types of loan deferments are economic hardship deferment, unemployment deferment and military deferment. Although education deferments are popular, they are only used for student loans and cannot be applied toward other debt. Whether you are seeking assistance for car payments, a mortgage, student loans or other debt, it is important to know your options for a loan deferment.
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Economic Hardship
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Economic hardship deferment is a common reason for a loan deferment. For student loans, lenders have a maximum of three years for participating in an economic hardship program. It is necessary to reapply each year.
If you are requesting a loan deferment for a car or mortgage, it may be as simple as having a few payments rolled to the end of your loan period to give you a break on payments for a few months. Many lenders for cars or homes will only do short-term deferments on a loan, unless you have become disabled or have lost a job. For some lenders, calling and making a statement regarding your financial situation may be enough to have them approve a deferment for a short period of time. However, generally lenders do not allow more than one or two payments to be deferred.
Normally, if documentation is supplied to prove economic hardship, your payments can be automatically deferred. This documentation can include the receipt of financial assistance from the govenrment.
Unemployment
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If you have recently become unemployed, you may be eligible to apply for a loan deferment. An unemployment deferment request can be made by providing proof of unemployment benefits or by showing that you are searching for full-time employment. Working with a local unemployment office or workforce development center may be helpful in certifying that you are actively searching for employment.
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Military Service and Active Duty
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Members of the military may get a loan deferment if they are deployed overseas. Reservists may qualify for a deferment if they are called to active duty.
Education Deferment
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An education deferment is a common loan suspension for those who are returning to school. This type of deferment works primarily for previous student loans and not for car, home payments or other debt.
If you enroll in a degree program and are at least half time, this may make you eligible for a deferment on a loan. Schools often have different rules for half time status based on whether the school has semesters, trimesters or quarters. If you drop below half-time, it will affect eligibility for a loan deferment and may make you ineligible for a Stafford loan. Upon graduation or if the borrower chooses to stop attending courses, student loans will normally resume six months after the last date of attendance. Make sure that the bank or other agency providing the loan has up-to-date information on the number of hours you are taking so that your loan does not come out of deferment.
Tips
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If you are trying to apply for a loan deferment, speak with the lenders that you have in regards to the period of time that they can give you to suspend your payments. Even though a deferment is not a source of income, it can help to alleviate financial strain. Try to avoid falling into default by planning ahead and requesting assistance.
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