Ever found yourself in a tight financial spot where paying your monthly loan installment seems like an impossible task?
Maybe an unexpected expense popped up, or you had to shift your budget for other pressing needs. Well, the good news is, some banks and credit unions offer a fantastic option called Skip-A-Pay, meaning you can skip a loan payment which can come as a lifesaver during such tough times. In this article, you'll learn what Skip-A-Pay really is, how it works, and why you should consider it.
Skip-A-Pay is a program offered by some banks and credit unions where you can skip one or more monthly loan payments without incurring any late fees or damaging your credit score. Skip-A-Pay could be available for car loans, personal loans, or even mortgages and credit cards. (Psst... But many financial institutions don't offer Skip-A-Pay for the same types of loans or for every loan. Check your financial institution's Skip-A-Pay program requirements to learn which loan you can skip a payment for!)
Skipping a payment means that the payment is deferred to the end of the loan term, or the loan term is extended by an additional month. Skip-A-Pay can be offered for a variety of reasons, like:
Needing a little extra cash / breathing room in your pocket
QUICK TIP: It's essential to understand that Skip-A-Pay isn't free; there may be an additional processing fee charged by the financial institution, and the interest will continue to accrue during the skipped payment.
how does skip-a-pay work?
Each financial institution may have different eligibility criteria and rules for Skip-A-Pay. Typically, loan account holders need to meet certain requirements, such as:
Having a good payment history
Making a minimum number of payments
Not having any delinquency or bankruptcy proceedings
Plus, there may be a limit on the number of times Skip-A-Pay can be utilized, and it's subject to approval.
Want to know what Skyla's loan officers like to see when reviewing a Skip-A-Pay request? Here's what you should know.
is it good to skip a payment?
Skip-A-Pay can be a great way to manage your finances when you're tight on cash or have unexpected expenses. By skipping a payment, you can free up some money to allocate toward other financial priorities without risking any late fees or credit damage. Additionally, by extending the loan term, you can spread out the total cost of the loan, making it more manageable in the long run.
QUICK TIP: Even though it may be a good idea to do Skip-A-Pay, remember that Skip-A-Pay is not a debt forgiveness program, and skipping payments will increase the total interest paid over the loan term.
While Skip-A-Pay programs can provide some relief to those who need it, it's important to carefully consider whether it's a good idea to skip a payment on a loan. Here are some pros and cons that'll help you when weighing to skip or not to skip:
Can provide temporary relief: This is the case if f you're experiencing financial hardship.
Offer breathing room in your pocket: Can free up cash for unexpected expenses or emergencies.
Low fee: May have a lower fee than late payment penalties.
Help with credit score:Can maintain your credit score by avoiding late payments.
It's not a long-term solution.
Interest will continue to accrue: This will happen during the skipped month, ultimately costing more over time.
Increase the overall interest on the loan: Skipping payments frequently can extend the life of the loan and increase the overall interest paid.
Could hurt your credit score depending on the financial institution: The loan may be reported to the credit bureau as a late payment. This can lead to a lower credit score, which can make it more difficult to access other financial products.
QUICK TIP: Skyla doesn't do this. When enrolled in Skyla's Skip-A-Pay program, your loan is reported as paid during the skip-a-pay period. Learn More >
when is the best time to skip a payment?
When considering whether to skip a payment on a loan, timing is an important factor to consider. If you're experiencing temporary financial hardship due to unforeseen circumstances, like a medical emergency or unexpected car repair, then skipping a payment may be a good option to help you get through a tough patch. In this case, it's important to communicate with your lender as soon as possible to discuss your options and determine if skipping a payment is the best course of action.
On the other hand, if you're simply looking to free up some cash for a non-essential expense, like a vacation or shopping spree, it may be better to avoid skipping a payment. Doing so can ultimately cost you more in interest over the life of the loan and may negatively impact your credit score if not properly communicated and approved by the lender.
does skipping a loan payment affect your credit score?
Usually, no! Unless you wake up one morning and decide to not make your loan payment without informing your bank or credit union.
Skipping a loan payment usually won't affect your credit score. However, it's important to communicate with your lender and make sure they're aware that you're skipping a payment.
Generally, lenders will report your loan as "current" if you have a payment arrangement in place, even if you're not making payments. If the lender isn't made aware of your payment arrangement, they may report the loan as "missed," which could negatively impact your credit score.
is there a skip-a-pay fee?
Yes, as I've mentioned earlier, there may be a fee to skip a payment, depending on the financial institution's policy. Some lenders may charge a one-time fee, while others may charge an interest penalty. It's important to read the terms and conditions carefully and understand any associated fees before deciding.
Skipping a payment can be a great way to free up some cash, but it's important to make sure that you understand the full costs before proceeding.
Does Skyla charge a fee for doing skip-a-pay?
Yes, but it's not much! Plus, the fee is automatically added to the loan balance. Learn more about Skyla's Skip-A-Pay program and other requirements when applying:
does interest still accrue during the skip-a-pay period?
Yep! Keep in mind that your loan balance will not be reduced during this time, and the interest will be added to the loan balance at the end of the period. This means that if you do choose to skip a payment, you will ultimately end up paying more in interest over the life of the loan. Keep this in mind when determining whether it makes sense to skip a payment.
how many times can i skip a payment on a loan?
The number of times you can skip a payment on a loan varies from lender to lender. Some may allow up to two skipped payments and others may not allow borrowers to skip two months in a row. There may be a limit on the number of times you can skip a payment, and approval is not guaranteed.
Make sure you communicate with your lender to understand the specific eligibility criteria and rules for Skip-A-Pay and determine if it makes sense for your situation.
how to do skip-a-pay at skyla?
Skip-A-Pay can provide valuable assistance to members facing financial hardships or in need of redirecting their funds temporarily. It is important, however, to recognize that Skip-A-Pay is not a long-term solution and must be used judiciously and with proper planning. Consistently skipping payments can lead to increased interest charges and delay the repayment of the loan.
As the Content Specialist and author of the Learning & Guidance Center, Yanna enjoys motivating others by uncovering all that's possible in the world of finance. From financial tips and tricks to ultimate guides and comparison charts, she is obsessed with finding ways to help readers excel in their journey towards financial freedom.
Join our Mailing List
& get articles sent straight to your inbox
You are leaving Skyla's website
You are entering a site that is not operated by the credit union. Skyla cannot be held responsible for the alternate site's content, nor does Skyla represent either party should you enter into a transaction. Please note the site's privacy and security policies may differ from those of Skyla Credit Union.
Please click “Go to URL…” to leave this website and proceed to the selected site.