How Skip-A-Pay Works

You might have an auto loan or credit card that is causing your finances to be stretched thin, and you’re wondering how you will cover your bills this month. If that sounds like a familiar situation, you may want to consider taking advantage of a skip-a-pay service.

Skip-a-pays can be a lifesaver when you’re in a tough spot financially, but it’s important to know what a skip-a-pay is and what is expected of you in the long run. Skip-a-pay, or skip my payment, means your lender has authorized you to skip a loan payment. Skip-a-pay doesn’t get you off the hook entirely – you’re still liable for the outstanding balance to your lender – but it can allow you some breathing room when your finances are tight.

Benefits to skipping my payment

Usually, banks offer skip-a-payment to customers in good standing with the institution. This means those customers can skip a car or loan payment for one month of their choosing. As we previously mentioned, this is beneficial because it allows breathing room for those in a tough spot financially. If you skip a $300 payment, that is $300 that you get to keep in your pocket that month to go toward groceries, gas or other bills.

Before you ask, we know what you’re thinking – will skipping a payment hurt my credit? Skipping a payment does not hurt your credit as long as you are taking advantage of a skip-a-pay offer or have the lender’s permission and are meeting the requirements set by the lender. Under these circumstances, even skipping a loan payment is considered meeting the loan repayment obligations. Your loan will not be listed as past due or missed on your credit report.

Regarding car loans, utilizing skip-a-pay instead of missing your payment altogether will give you time to avoid late fees and even help you avoid being classified as a defaulter. Those who default on their auto loans will face repossession of their vehicle if payments are not made or are frequently missed.

Consequences of skip-a-pay

Skipping a payment doesn’t mean skipping out on interest. It’s important to note that interest will continue to accrue when you skip a payment, even during the month you’ve skipped a payment. Unfortunately, if you take advantage of a skip-payment offer, you will likely owe more overall because of the extra interest that accrues.

Skipping a payment also doesn’t mean forgetting about it altogether. The payment you skip is added later in your loan payment schedule, so the payment will have to be made eventually. Since skipping a payment adds the deferred payment to the end of your loan, the length of your loan could also expand. This would leave you owing more over a longer period.

Breathing roomMore interest
Won’t hurt creditLonger loan term
Avoid defaulting 

How to utilize skip-a-pay

As we have discussed, skip-a-pay is not a free ride. Since you still accrue interest and extend the ultimate payback time, a skipped payment comes at a cost. However, if you face a job layoff, furlough, business shutdown, or unexpected medical crisis, skipping payments for a temporary period may be necessary to help you weather the storm.

If you think skip-a-pay sounds like a good fit for your circumstances, follow these steps:

  1. If your lender already has a payment deferment option in your loan agreement, you only need to choose “skip a payment” in your payment coupon book or apply to skip a payment on the lender’s website.
  2. If your lender doesn’t explicitly mention deferment in the agreement, first call them to understand your options. Some lenders may need a “hardship letter” from you explaining the circumstances and when you can resume payments again.
  3. The lender will review the letter, your current payment history and your credit score before deciding.
  4. If the lender agrees to defer payments, they will send you a forbearance agreement with further details – like any fees or penalties for deferment and the date from which you should resume payments.
  5. The deferment period can vary depending on the lender

Before skipping a payment

Keep in mind that skip-a-pay is not a service to become dependent on. Many people fall out of the habit of making monthly payments when they skip just one payment. This habit will negatively affect your credit score since payment history influences credit scores the most. Never skip payments without a lender’s permission, and be sure to make your full payments the next month.

If you feel like you could use a skip-a-payment every month, you may need financial help. Learning how to manage financial stress and seeking resources on money management and budgeting tips is essential. Visit Your Money Guide on our website for more financial guidance.

ValleyStar’s skip-a-pay offer

Here at ValleyStar Credit Union, we know that times can get tough and money can be tight, and that’s why we offer our skip-a-pay program year-round. We want to meet our members where they are. Whether you’re facing financial hardship, catching up on bills, saving for a vacation, or holiday shopping, you can skip a payment on your qualifying loan.

We allow our members to skip two payments per year. All you have to do is complete the skip-a-pay form on the ValleyStar website. Remember that we must receive the skip-a-pay form and processing fee no later than one week before the due date in the month you want to skip. For example, if the loan payment you wish to skip is due on December 15, 2022, we must receive it by December 8, 2022.

Determine if skip-a-pay is right for you

Our advice is to carefully consider your circumstances when deciding if skip-a-pay is right for you. If you’re facing financial hardships, think of skip-a-pay as a leg to stand on while you readjust your finances. You may ask yourself, “Will skipping my payment benefit me in the long run?” If the answer is yes, contact us today to take advantage of skip-a-pay.