How Often Can You Defer a Car Payment?

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Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - September 22, 2020

How often you can defer a car payment depends on your auto lender’s deferment policy. They may allow just one deferment or multiple deferments. The amount of times you can defer your car loan largely depends on the language in your loan contract. Your lender could limit how many times you can defer your loan by year, or by the overall loan term.

Car Loan Deferment Requirements

If you need to defer some payments, talk to your lender as soon as possible. A deferment pushes the pause button on your car payments. One could last for one month or even four months – it depends on the lender and your loan contract. Most often, the payments that were deferred are added to the back end of your car loan. Deferred payments don’t disappear, you simply pay them later.

Most times, auto lenders require that you’re current on payments to qualify for deferment. This means if you’ve already missed a payment (or a few), you’re probably not going to be accepted, since you’re already behind.

Your lender might require that you’ve had a qualifying unexpected life event to defer your loan, like an illness or a job loss. They may even require you to fill out a “hardship letter” that explains why you need the deferment and when you plan on being able to repay the loan. Additionally, your lender may not approve you for one if your credit score is worse than when you started the car loan.

Lenders take deferments pretty seriously, and it’s important to remember that they aren’t free passes – it only pauses your vehicle payments temporarily.

When Deferring an Auto Loan Makes Sense

Not everyone should defer their car payment. Here are a few scenarios when deferments make the most sense:

  • Injury – If you are injured and you’re going to take time off work and lose some income, a deferment could help. If you know you’re going to be returning to work soon and you’ll be able to resume car payments, a deferment makes sense.
  • Illness – If you fall ill and you need to take more than a few days off to recover, then a deferment makes sense, too.
  • Temporary leave/furlough – The coronavirus pandemic put a lot of people out of work, and many without pay or the ability to collect unemployment. If you’re going to be out of work for a few months but you know you’ll be returning soon, then a deferment could be a saving grace.
  • Unexpected expense – Sometimes, things come up, and those events could drain your wallet. Medical bills or even household repairs could be enough to offset your budget for the month and put your car payment on the back burner. Before you decide to just skip a payment, talk to your lender about a deferment so you can recoup your finances from an unexpected expense.

It’s important to consider the temporary relief that a deferment can offer. If you’re going through a permanent life change, then refinancing may be a better idea.

Pros and Cons of Car Loan Deferments

Before you head out and talk to your auto lender about deferring your car loan, we have pros and cons to consider.

Pros of deferring car payments:

  • Avoiding fees associated with late payments.
  • Avoiding a possible repossession or default.
  • Giving you time to consider and look for refinancing, if needed.
  • Can give you time to get back on your feet.

Cons of deferring car payments:

  • Deferments are temporary.
  • Your interest charges likely won’t stop.
  • Your auto lender may still make you pay for the monthly interest.

Usually, the deferred payment(s) is pushed back to the end of your car loan. This means by deferring your auto loan, you’re extending your term. This also means more interest charges, since nearly every car loan uses a simple interest formula, which means you’re charged interest on the balance of your loan. The longer it takes to pay off the vehicle, the more you owe in interest charges to the lender.

If you’re considering deferring your car payments multiple times throughout your loan term, consider the possible interest charges associated with extending it.

Consider Your Options

Now that you’re aware of the things that could happen if you defer your vehicle payment, you can mull them over and talk to your lender about all your options.

Consider these questions as you’re exploring the possibility of an auto loan deferment: Does your lender charge fees for missing a payment? Are you already behind on your payments? Are you going to be able to resume payments after the deferment is over?

If you’re not sure how you’re going to be able to handle the auto loan once the deferment ends, or you don’t qualify for one, it may be time to trade in the car before things go south. You want to avoid a repossession to the best of your ability, since a repo can do major damage to your credit score and make it difficult to get into another auto loan for a while.

If you want to be proactive and trade in your current vehicle for a more affordable one that's fit for your current budget, you can start right here at CarsDirect. We have a nationwide network of dealerships that are equipped to work with borrowers in many different credit situations.

Get matched to a dealer by filling out our free car loan request form. We’ll look for a dealership in your area with the lending options you need.

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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