Deferral vs Deferment: When To Use Each One In Writing?

When it comes to financial terms, it’s not uncommon to come across words that are similar in meaning but have different applications. Two such terms are deferral and deferment. While they may seem interchangeable, they actually have distinct definitions and uses in the world of finance.

So, which of the two is the proper word to use? The answer is that it depends on the context. Deferral refers to the postponement of a payment or an expense, while deferment is the act of delaying a debt or obligation. Essentially, deferral is used when referring to a payment or expense, while deferment is used when referring to a debt or obligation.

To put it simply, deferral means delaying a payment or expense to a later date, while deferment means pushing back a debt or obligation to a future time. It’s important to keep this distinction in mind, as using the wrong term could lead to confusion or misunderstandings.

Now that we’ve established the difference between deferral and deferment, let’s take a closer look at each term and explore their uses in more detail.

Define Deferral

Deferral is a term used in finance to refer to the postponement of a payment or obligation to a later date. It is an agreement between a borrower and lender where the borrower is allowed to delay payment of a debt or loan for a specified period of time. This period may be temporary or permanent, depending on the agreement made between the parties involved. In most cases, deferral is granted as a means to provide temporary relief to a borrower who is experiencing financial difficulties.

Define Deferment

Deferment, on the other hand, is a term used in education to refer to the postponement of loan payments for a specified period of time. This period is usually granted to students who are still in school, serving in the military, or experiencing economic hardship. During the deferment period, interest may accrue on the loan, but the borrower is not required to make payments. Deferment is a common feature of most student loan programs and is intended to help borrowers avoid defaulting on their loans.

How To Properly Use The Words In A Sentence

When it comes to using the words deferral and deferment, it is important to understand the subtle differences between the two. Here’s a breakdown of how to properly use each word in a sentence.

How To Use Deferral In A Sentence

Deferral refers to the act of delaying or postponing something, typically a payment or obligation. Here are some examples of how to use deferral in a sentence:

• After losing his job, John requested a deferral on his car loan payments.
• The company announced a deferral of its annual shareholder meeting due to the pandemic.
• She decided to take a gap year and requested a deferral of her college admission.

As you can see, deferral is typically used in financial or legal contexts, where a payment or obligation is being delayed or postponed.

How To Use Deferment In A Sentence

Deferment, on the other hand, refers to the act of putting something off until a later time or date. Here are some examples of how to use deferment in a sentence:

• The project was put on deferment until the team could secure more funding.
• She requested a deferment on her jury duty service due to a scheduling conflict.
• The company announced a deferment of its annual holiday party until after the new year.

As you can see, deferment is typically used in more general contexts, where something is being delayed or postponed without necessarily involving a payment or obligation.

By understanding the subtle differences between deferral and deferment, you can use these words correctly and effectively in your writing.

More Examples Of Deferral & Deferment Used In Sentences

In order to better understand the difference between deferral and deferment, it can be helpful to see them used in context. Here are some examples of each:

Examples Of Using Deferral In A Sentence

• He requested a deferral of his student loan payments until he found a job.
• The company offered a deferral of the payment deadline for customers affected by the hurricane.
• The athlete was granted a deferral of his suspension until his appeal could be heard.
• The university allows deferral of admission for one year for students who need to take a gap year.
• The customer asked for a deferral of her mortgage payment until she could get back on her feet financially.
• The investor was granted a deferral of taxes on his capital gains until the following year.
• The artist requested a deferral of her exhibition until she could finish her latest work.
• The city council voted to approve a deferral of the construction project until the environmental impact report could be completed.
• The homeowner received a deferral of property taxes due to financial hardship.
• The employee was granted a deferral of his performance review until the end of the quarter.

Examples Of Using Deferment In A Sentence

• The student was eligible for a deferment of his loan payments while he was enrolled in school.
• The company offered a deferment of the payment deadline for customers affected by the pandemic.
• The military veteran was granted a deferment of his VA loan payments while he was deployed overseas.
• The university allows deferment of admission for military service members who need to fulfill their duty before attending.
• The customer requested a deferment of her car loan payments due to a temporary loss of income.
• The investor was granted a deferment of interest payments on his bonds until the maturity date.
• The farmer was granted a deferment of his loan payments due to a natural disaster that destroyed his crops.
• The city council voted to approve a deferment of the construction project until the funding was secured.
• The homeowner received a deferment of mortgage payments due to a temporary disability.
• The employee was granted a deferment of his retirement account contributions until the following year.

Common Mistakes To Avoid

When it comes to student loans, deferral and deferment are two terms that are often used interchangeably. However, this is a common mistake that can lead to confusion and misunderstandings. In this section, we will highlight the differences between deferral and deferment and explain why it is important to use these terms correctly.

Common Mistakes

One of the most common mistakes people make is using the term “deferral” when they actually mean “deferment.” Deferral is a period of time during which you are not required to make payments on your student loans, but interest continues to accrue. On the other hand, deferment is a period of time during which you are not required to make payments and interest does not accrue on certain types of federal student loans.

Another mistake people make is assuming that they are automatically eligible for deferment or deferral. In reality, you must meet specific requirements to qualify for each of these options. For example, to qualify for deferment, you must be enrolled in school at least half-time, serving in the military, or experiencing economic hardship. To qualify for deferral, you must be enrolled in school at least half-time, serving in the Peace Corps, or experiencing unemployment or economic hardship.

Tips For Avoiding Mistakes

To avoid making these mistakes in the future, it is important to understand the differences between deferral and deferment and to use these terms correctly. Here are some tips to help you avoid common mistakes:

• Read the terms and conditions of your student loans carefully to understand your options for deferment and deferral.
• Make sure you meet the specific requirements for each option before applying.
• If you are unsure about which option is best for you, contact your loan servicer for guidance.

By following these tips, you can avoid common mistakes and make informed decisions about your student loans.

Context Matters

When it comes to deciding between deferral and deferment, context is key. The choice between the two options can depend on various factors, such as the type of loan or payment plan, the borrower’s financial situation, and the lender’s policies.

Examples Of Different Contexts

Let’s take a closer look at some different contexts and how the choice between deferral and deferment might change:

Type of Loan

For federal student loans, deferment and forbearance options are available, while private student loans may offer deferral options. In this context, the choice between deferral and deferment depends on the type of loan and the borrower’s eligibility for each option.

Financial Situation

If a borrower is experiencing financial hardship and cannot make their loan payments, they may be eligible for a deferment or forbearance. In this context, the borrower’s financial situation is the determining factor in which option is best for them.

Lender Policies

Some lenders may only offer deferral options, while others may offer both deferral and deferment options. In this context, the lender’s policies dictate the borrower’s options.

Summary

Overall, the choice between deferral and deferment depends on the context in which they are used. It is important for borrowers to understand their options and eligibility for each, based on their specific circumstances.

Exceptions To The Rules

While the rules for using deferral and deferment are generally straightforward, there are a few exceptions where they might not apply. In these cases, it’s important to understand the nuances of each situation to determine the best course of action.

Exceptions For Deferral

Deferral is typically used to delay payments on a loan or investment. However, there are a few exceptions where deferral might not be an option:

• Default: If you have defaulted on your loan, deferral may not be an option. In this case, you may need to work out a repayment plan with your lender.
• Interest-Only Loans: If you have an interest-only loan, deferral may not be an option. This is because you are only required to pay the interest on the loan, not the principal. In this case, you may need to refinance your loan or work out a new payment plan with your lender.
• Fixed-Term Loans: If you have a fixed-term loan, deferral may not be an option. This is because the loan has a set term and cannot be extended. In this case, you may need to work out a new payment plan with your lender.

Exceptions For Deferment

Deferment is typically used to postpone payments on a loan or investment. However, there are a few exceptions where deferment might not be an option:

• Private Loans: If you have a private loan, deferment may not be an option. Private loans do not always offer deferment options, so you may need to work out a repayment plan with your lender.
• Graduate Loans: If you have a graduate loan, deferment may not be an option. Some graduate loans do not offer deferment options, so you may need to work out a repayment plan with your lender.
• Parent PLUS Loans: If you have a Parent PLUS loan, deferment may not be an option. Parent PLUS loans do not offer deferment options, so you may need to work out a repayment plan with your lender.

It’s important to note that these exceptions may vary depending on the lender and the specific loan or investment. Always consult with your lender or financial advisor to determine the best course of action.

Practice Exercises

Learning the difference between deferral and deferment can be challenging for some people. To help readers improve their understanding and use of these terms in sentences, here are some practice exercises:

Exercise 1: Fill In The Blank

Choose the correct word (deferral or deferment) to fill in the blank in each sentence below:

1. The student requested a ___________ of their tuition payment until the following semester.
2. The company announced a six-month ___________ of the project due to budget cuts.
3. She was granted a one-year ___________ of her student loan payments due to financial hardship.
4. The athlete received a one-year ___________ from competition due to a serious injury.

Answers:

1. deferral
2. deferment
3. deferral
4. deferment

Exercise 2: Sentence Completion

Complete each sentence below with the correct form of deferral or deferment:

1. The ___________ of his taxes was granted due to his military service.
2. After losing her job, she requested a six-month ___________ of her car payments.
3. The company announced a ___________ of the project until the new CEO takes over.
4. He was granted a one-year ___________ of his prison sentence due to his cooperation with the investigation.

Answers:

1. deferment
2. deferral
3. deferment
4. deferral

By practicing these exercises, readers can improve their understanding and use of deferral and deferment in sentences. Remember that deferral refers to a delay or postponement of something, while deferment refers specifically to the delay of payments or obligations.

Conclusion

After exploring the differences between deferral and deferment, it is clear that these two terms are often confused and used interchangeably. However, there are key distinctions between the two that should be understood in order to use them correctly in written and spoken communication.

Deferral refers to the act of postponing something to a later date, while deferment specifically refers to the postponement of a financial obligation. It is important to use these terms accurately in order to avoid confusion or miscommunication.

Additionally, it is important to note that the usage of these terms may vary depending on the context and industry. For example, in the academic world, deferment may be used more frequently to refer to the postponement of student loan payments.

As with any aspect of language and grammar, it is always beneficial to continue learning and expanding one’s knowledge. By understanding the nuances between similar terms such as deferral and deferment, we can communicate more effectively and accurately in both written and spoken contexts.

Therefore, I encourage readers to continue exploring the intricacies of grammar and language use, and to strive for clear and precise communication in all aspects of their lives.