Personal Loan Deferment vs Forbearance: What’s the Difference?

If you’re struggling to make personal loan payments, your lender may offer temporary relief options like deferment or forbearance. These programs can pause or reduce payments during financial hardship, but they are not the same—and choosing the wrong option can increase your loan costs.

This guide explains the differences between personal loan deferment and forbearance, how each works, and how to decide which option is better for your situation.

What is personal loan deferment?

Deferment allows you to temporarily pause your personal loan payments for a defined period, usually due to financial hardship such as job loss, medical issues, or income disruption.

During deferment, required payments are suspended, but interest often continues to accrue unless the lender explicitly states otherwise.

What is personal loan forbearance?

Forbearance is another form of temporary relief that allows reduced payments or a short-term pause rather than a full suspension of payments.

Forbearance periods are typically shorter than deferment and are often granted at the lender’s discretion.

Key differences between deferment and forbearance

While both options offer payment relief, they differ in structure, duration, and impact:

• Deferment usually pauses payments entirely
• Forbearance may reduce or delay payments temporarily
• Interest typically accrues under both options
• Approval requirements vary by lender

How interest accrues during deferment and forbearance

In most cases, interest continues to accrue during both deferment and forbearance. This means your loan balance may increase even while payments are paused.

Accrued interest may be added to your principal balance once the relief period ends, increasing total repayment costs.

Impact on your credit score

Approved deferment or forbearance typically does not harm your credit score, as long as you follow the agreed terms.

Missed payments without approval, however, can lead to delinquency and credit damage.

When deferment may be the better option

Deferment may be preferable if you need complete payment relief for a longer period and expect your financial situation to improve.

When forbearance may make more sense

Forbearance may be a better choice if your hardship is short-term and you can manage reduced payments rather than a full pause.

How to request deferment or forbearance

You’ll typically need to contact your lender, explain your financial situation, and submit any required documentation.

Approval is not automatic, so it’s important to request assistance as early as possible.

Risks of relying on payment relief programs

While helpful, deferment and forbearance can increase the total cost of your loan and extend your repayment timeline.

These options should be used as temporary solutions rather than long- term strategies.

Alternatives to deferment and forbearance

• Adjusting your budget
• Making partial payments
• Changing your due date
• Refinancing the loan

Frequently asked questions

Are deferment and forbearance guaranteed?No. Both are offered at the lender’s discretion.

Will interest stop accruing?Usually no, unless specifically stated by the lender.

Can I use both options?Some lenders allow multiple relief periods, but limits apply.