HOUSTON - Bank of America is announcing it will let homeowners take a few months off of paying their mortgages during the coronavirus outbreak. Other lenders are offering deferments on car loans.
These offers can really help people struggling to pay their mortgage and car payments, but consumer advocates caution consumers to understand what they'll have to pay later.
Bank of America says it will let homeowners and car owners pause their payments. How many months will depend on your situation, and the payments will be added to the end of the loan without hurting your credit.
This comes after federal regulators ordered lenders to offer homeowners flexibility. Capital One, Chase, Citibank, Trust, U.S. Bank, and Wells Fargo also say they'll offer mortgage holders deferments or payment options on a case-by-case basis.
But Credit Coalition Executive Director Sherrie Young says you must contact the lender first.
"Don't just assume you can stop making payments. A lot of people got into trouble with Harvey," said Young. "They realized later they are being charged terrible fees and possibly be in line for repossession or foreclosure because they didn't communicate."
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Auto financing companies also say they are offering payment deferments, some up to six months. Hyundai, Ford, Nissan, Toyota, Lexus, General Motors, and BMW all want borrowers to contact them if they can't make payments for a case-by-case solution.
But money management coach Kelly Showalter says be sure you ask about interest, fees, or payments you'll need to make later.
"Figure out what they're offering, what the penalties will be if there are penalties for skipping," said Showalter.
Adds Young, "You want to find out exactly when is that next payment due and what's going to happen to the payments that I'm not making."
They say just because there's an offer to skip payments, it's better to stay current if you can.
"Just stay calm. We've been through worse than this and this is going to pass," said Showalter.