Pros and Cons of Skipping a Loan Payment: Should You Take the Offer?

Holidays bring joy and excitement and, so long as I’m not the chef, deliciously cozy soups and pastries that are almost too pretty to eat. They ALSO bring the pressures of holiday spending. What if I told you that SunWest’s Skip a Pay program could give you a breather in December by allowing you to skip a payment on certain loans?

While this can be a great option for those looking for financial relief during one of the most expensive times of the year, it’s important to understand how a skip payment works and whether it’s the right move for your financial situation.

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what is skip a pay?

Skip a Pay is a program offered by SunWest that allows you to hit pause on your December payment for certain loans. There are many credit unions and banks offering skip a payment or some type of holiday skip payment program, but is it always the right option? When you take advantage of the offer to skip a loan payment, it doesn’t mean you’re off the hook entirely.

The payment gets added to the end of your loan, typically extending your term. While you’re enjoying the extra cash in hand, keep in mind that interest will continue to accrue during the skipped month.

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pros of skipping a loan payment

Extra Cash for the Holidays

You know that moment when you look at your family and friends’ wish lists, then your bank account, and you’re left wondering how Santa does it? Holiday skip a pay programs give you some breathing room for moments like this–when you’re stretched thin but can’t bear letting anyone down. While this offer can relieve that stress, stay mindful of your holiday budget.

Avoid Dipping into Savings

Instead of pulling from your emergency fund or dipping into that savings balance you’ve been steadily building, you can take advantage of Skip a Pay as a short-term solution for easier cash flow during the high-spending season.

No Credit Impact

Does skip a payment hurt credit? Nope! Skipping a payment through a holiday skip program like Skip a Pay won’t affect your credit score. This is not the same as missing or being late on a payment, so there’s no need to worry about your credit score taking a hit.

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cons of skipping a loan payment

Interest + Fees

Just because you skipped the payment doesn’t mean your loan stops. Interest will still accumulate on the balance, and that could add up to paying more in the long run. There is also a $30 fee for each SunWest loan you choose to skip, so make sure to crunch the numbers. 

Loan Term Extension

Skipping a payment doesn’t erase the payment, it relocates it. Your payment is moved to the end of the loan which means that your final loan payment will be later than originally scheduled. That may not be a dealbreaker for you, but it’s something to consider if your goal is to pay off your loan early.

Impact on GAP Coverage

If you have Guaranteed Asset Protection (GAP), skipping a payment could affect your GAP coverage. In the event of a total loss or theft, your higher loan balance may mean you receive less from GAP than expected. Make sure to review your GAP policy or contact your lender to ensure you’re fully informed.

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is skipping a payment right for you?

Ultimately, it comes down to your financial goals and situation. Skip a Pay can be a smart move if you’re strapped for cash, unsure of how to make holiday expenses (like trips to see the family and gift exchanges) work with the Ghost of Christmas Past Due Payments looming like a holiday tale villain, but it’s not for everyone. Assess your long-term goals, current budget, and whether extending your loan term or paying additional interest is the right decision for your financial future. 

TL;DR: Yes, if you’re seriously stressing about how to make ends meet and want to avoid using high-interest credit cards to cover bills and purchases. No, if your goal is to pay off your loan early or avoid any additional fees or interest.