Payment Deferment Options With Bad Credit

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Bethany Hickey is is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 


, Content Manager - October 8, 2021

Manufacturers sometimes offer payment deferment incentives, such as no car payments for the first 60, 90, or even 120 days of a loan. Borrowers with bad credit are often tempted by these offers which seem like a money-saving deal, since they’re usually required to put cash down to qualify for vehicle financing.

Credit Score Requirements for Deferment Programs

If you’re struggling with credit challenges and would like a shot at incentives and deferment options, you may have to do a little bit of research and have patience. Captive lenders such as Ford Credit and Kia Motors Finance are known for having programs open to borrowers with lower credit scores, but they’re not all that common.

During the height of the coronavirus pandemic, payment deferral incentives were popular – and sometimes outlandish – to draw in buyers. In March 2020, GM announced that they were doing a deal for 0% APR for 84 months with no payments for 120 days on select models for a limited time.

However, it’s rare that deferred payment programs such as this are extended to borrowers with less than perfect credit – or offered at all. The GM deal we mentioned was only available to borrowers with near-perfect credit. These incentives are typically limited to well-qualified borrowers, which usually means consumers with credit scores well into the 700s, or at the very least above 670.

How Deferred Payments May Actually Work

If you manage to find a deferred payment car deal and qualify with poor credit, make sure to read the fine print.

In some cases, a deferred payment loan is actually extended, and the interest charges can continue to accrue during the deferral period. For example, if you agree to a 120-day deferment deal on a 60-month loan, it can mean that your loan term is actually 63 months long but no payments are due in the first three months.

Another thing to keep in mind is that 0% APR financing and deferred payments aren’t normally combined. It’s usually a one-or-the-other type deal, so you’re usually left between choosing a low interest rate, or a few months without a car payment. And long term, the lower APR represents more savings, so choose wisely.

While captive lenders typically require high credit scores to qualify for financing, their incentives can mean savings and good deals. These can include cash rebates, 0% APR financing, and deferment programs. Even if you have bad credit, trying for a car loan with a captive lender could mean getting a great deal.

Captive Lenders Not Your Path?

Qualifying for a car loan with a captive lender with bad credit isn't always possible. If you have a poor credit score that's making it hard to land a car, then locating a special finance dealership that's signed up with subprime lenders may be what you need. These lenders specialize in assisting borrowers with credit challenges and we want to help you find them. At CarsDirect, we have a coast-to-coast network of special finance dealerships, so complete our free auto loan request form and we'll look for one in your local area. There's never a cost or obligation to get connected, so start today.

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, Content Manager

Bethany Hickey is is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 


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