Loan Payment Deferrals

Loan Payment Deferrals

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated May 5, 2021

Whether it’s a medical emergency, a car repair, a job loss, or any other large unexpected expense, Canadians have turned to loans for help during these times. In fact, a survey by Finder reported that 65% of Canadians have taken out a personal loan in 2019. With so many people relying on loans, it is expected that some may not be able to make their payments at times. 

Unfortunately, defaulting on a loan payment can have dire consequences on your credit score. Moreover, when you miss a payment, most lenders will charge a late payment fee which may make paying off the loan harder in the future. If you continue to default, things can escalate quickly from penalty charges to collections or even garnishment of wages

Fortunately, there are a few ways you can defer your loan payment, so you can temporarily relieve some of your financial burdens and get your finances back on track.  

What Does It Mean To Defer A Loan Payment?

When you defer a payment, you make an agreement with your lender that you will not make any payments for a specific period of time. However, that does not mean that these payments are cancelled, they are simply being pushed back. Meaning you’ll still have to make those payments later and depending on your agreement with your lender, interest may accrue on your outstanding balance during the deferral period. This in turn will increase the amount you originally set out to pay. 

Deferrals And Credit Scores

A deferral is something both you and your lender agreed upon, as such, your payment is not seen as missed or late. Missed and late payments can negatively impact your credit score, but a deferral is not reported to the credit bureaus. However, do make sure to check your credit score, as late and missed payments are reported electronically. As such, if your lender does not make the proper adjustments, it may register your deferral as a late or missed payment. By monitoring your credit, you can correct any errors on your report and make arrangements with your lender so it doesn’t happen again. 

How Do You Apply For A Loan Payment Deferral? 

In most cases, there’s no form or portal to request a payment deferral as most lenders provide deferrals based on your unique financial situation. To request a deferral, you must speak to your lender by calling or making an in-person appointment with them. Many lenders are willing to work with their clients by offering adjustments to their current loan such as lower payments, lower interest rates, or even deferrals. The reason being, your lender would much prefer you to pay them something rather than nothing. 

Read The Fine Print

If you only need a one-month payment deferral, do check your contract. Often times, there will be a skip a payment clause. However, it is important to read the fine print as it may come with fees. Be sure to contact your lender and inform them of your decision to use the “skip a payment” option and verify that it won’t be reported to the credit bureaus as a late or missed payment. 

Alternatives To Deferring Your Loan Payment 

Pay Late

Though it is important to make your loan payments on time, sometimes paying slightly late or within the 30 days before the next due date can be a way to “defer” your payment. Of course, you would be charged interest and perhaps even a late penalty fee, but depending on why you need to defer the payment, it may be worth the extra charges. Moreover, most lenders won’t report the late payment to the credit bureaus unless it’s 30 days past its due date. This option should be used by those who need a couple of extra weeks to get their finances in order. Those who require more should consider refinancing.


If you can’t defer your loan payments, refinancing can be a good solution. A new loan can lead to a lower interest rate and longer repayment terms, which will lead to smaller more manageable payments. However, despite the lower payments and interest, you are likely to pay more on interest overall. 

When applying for a new loan, be sure to apply before you default on your current loan as a default can ruin your chances of qualifying for a new loan. Most lenders will be unwilling to lend to someone who is already behind on payments and those who are willing may charge higher rates.

Learn How to Tackle Debt

Borrow Money From A Friend Or Family Member

It can be hard asking for money from your friends or family, but they can often be a safe and reliable form of financial support. Simply explaining your situation is usually enough for a friend or family member to extend a helping hand. You can even opt to create a contract with details of the money borrowed, so it feels more like a transaction. 

Which Banks Are Currently Offering Loans Deferrals Amid COVID-19

Amid the COVID-19, many of Canada’s major banks are offering deferrals for loan payments, mortgage payments, credit card payments and more. Depending on your financial situation, you may qualify for 1 to 6 months of payment deferrals. Due to these exceptional circumstances and the sheer volume of people affected by COVID-19, you can request for a payment deferral by applying online with your bank. 

Speak To A Credit Counsellor

If none of the options above is enough to get you back on track with your financial obligations, you may want to consider speaking to a credit counsellor. A credit counsellor will review your finances and come up with a solution that will help you get out of debt such as a debt consolidation program, a consumer proposal or even bankruptcy. 

Rating of 5/5 based on 3 votes.

Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Industry Spotlight

What's happening with Canada's credit industry?

goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest

goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest

goPeer is Canada's first consumer peer to peer lending platform and connects creditworthy Canadians looking for a loan with everyday Canadians looking...

Read Post
Find The Best Rate
In Your Region
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.