Loan deferral is a temporary agreement between a borrower and a lender that allows the borrower to pause or reduce their loan payments for a specific period. This option is often used during financial hardships, such as job loss or unexpected expenses, to help borrowers manage their finances without defaulting on their loans. During the deferral period, interest may continue to accrue, depending on the terms of the loan. Borrowers should carefully review their loan agreement and communicate with their lender to understand the implications of deferring payments, including how it may affect their overall debt and credit score.