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Can you defer a car loan payment? Here is everything you need to know

If your finances are getting tighter, you can always defer your car loan payments for a while. In this post, we’ll break down everything you need to know about skipping car payments and what to watch out for.

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So you’ve run the numbers, and there’s no getting around the fact that you simply don’t have enough money to pay your next auto loan payment. Between skyrocketing gas prices, rising costs for new and used cars, and general spending on goods across the country, it might be hard to come up with enough money to pay off your car loan. In such a case, it’s best to try to defer your payment until your finances stabilize.

However, deferring a payment in the wrong circumstances could cause more harm than good. This simple explainer will tell you everything you need to know.

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How does a car loan payment deferment work?

Deferring a car loan payment means asking your lender to let you lower your next payment, pay only the interest portion of it, or skip it altogether. You can defer payment for a month or even longer, depending on the severity of your financial situation. However, this is based on the assumption that you will repay the amounts after the deferment period.

Different lenders have different deferment periods and procedures to activate it. Some may already have a written deferment option in their loan agreement, while others may require you to submit written proof of financial hardship. Nor this website, do not consider the postponement lightly, since you will still have to return the omitted payments in the following months.

The deferred amounts are added to the total balance due, and you will continue to accrue interest on the loan throughout its term.

When can I defer a payment?

You can choose to defer a car loan payment when you feel your cash flow/income will take a hit in the next month.

Some examples of such situations include:

  • If you are experiencing a financial emergency that has strained your monthly budget, such as medical bills, home repairs,
  • If you’re between jobs and don’t have enough savings to pay the next payment
  • When you’ve had an injury or illness and are taking time off but lose some income in the process
  • When you have been suspended and you do not know if you will have a stable source of income in the coming months
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How to defer a car payment steps to follow?

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1. If your lender already has a deferment option in your loan agreement, all you need to do is choose to skip a payment in your payment coupon book or request to skip a payment on the lender’s website.

2. If your lender doesn’t explicitly mention forbearance in the agreement, call them first to understand what your options are. Some lenders may need a hardship letter from you that explains the circumstances and when you can resume payments again.

3. The lender will review the letter, your current payment history, and your credit score before making a decision.

4. If the lender agrees to defer payments, they will send you a forbearance agreement that will have more details, such as fees or penalties for deferment, and the date from which you must resume payments.

5. The deferment period can vary depending on the lender, ranging from one to three months.

Remember that deferring your car loan payments does not mean that you are free from the responsibility of paying them. Skipped payments will be added to your remaining payoff amount and the term of your loan will be extended until you finish paying off principal and interest. You’ll likely pay more interest in the long run because of it.

How many times can you defer your auto loan payments?

Generally, the number of times you can elect a car payment deferment depends on your lender. It’s best to connect with them first, ask what your options are, and only then decide to defer more than once.

Will deferring a car loan payment hurt my credit?

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Deferred payments will not negatively affect your credit score as long as you have the permission of the lenders. If you have provided a hardship letter to the lender with a genuine reason and have signed the forbearance agreement, a car loan deferment will still be considered payment as agreed in the loan agreement.

Seven alternatives to defer your car loan payments

Refinance your car loan

Auto loan refinancing can help you get a new loan, pay off your old one, and get better terms and conditions, like a lower APR and lower monthly payments.

Lower your car loan payment

If you negotiate with the lender, you may be able to lower your amount to a level you can afford. However, if your lender has already sold your loan to another financial institution, this option may not work.

Pay off the loan faster

If you anticipate a funding crisis in the near future, you can choose certain applications to pay off your car loan faster. Bi-weekly payments, excluding add-ons to monthly payments, paying more toward principal, and paying off high-interest loans first are some of the common methods for reducing debt quickly.

Change your payment due date

If your cash shortage is temporary, you can also ask the lender to change your payment due date to a more convenient date. For example, you can easily avoid skipping payments if your due date is close to your payday.

Transfer your loan to someone else

Although this is a rare option, some lenders allow you to transfer your loan to a third party. However, the new borrower must be willing to accept the loan from him and have an acceptable credit score.

Sell ​​the car and pay off the car loan

Selling the car allows you to pay off a large loan amount quickly and get out of bad debt. You may not be able to repay the entire loan, but it will free up some of your finances easily.

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Deliver the car before recovery

Allowing the lender to repossess the vehicle should be your last resort. The lender will take possession of the car and your credit score will take a slight hit, but it’s better than involuntary possession.

Pros and Cons of Auto Loan Deferments


  • It will give you time to avoid late fees
  • Helps you look at other options to close the loan early, like refinancing.
  • Deferment can help you avoid being classified as delinquent and prevent repossession of the vehicle
  • Gives you time to better organize your finances


  • Skipped loan payments still need to be paid back later, deferment is only temporary relief
  • You will pay more in interest charges because the term of your loan has been paid
  • You may have to pay an auto loan deferment fee

Should I apply for a car loan deferment?

If you absolutely can’t afford to keep up with your car loan payments in the coming months, it’s always best to request a deferment. If you miss a payment without notifying your lender, it will not only affect your credit score but also lead to default.

Frequently asked questions (FAQ)

Can a car loan payment be deferred for six months?

Most lenders allow auto loan deferment for up to three months. Very few lenders allow you to skip payments for up to six months. However, the lender might consider the option if you have a good credit score, a consistent payment history, and your current financial circumstances.

Do you have to return deferred payments?

Yes, skipping payments on your car loan doesn’t mean you don’t have to pay it back. The deferment only means that you are exempt from paying the amounts for a certain period after which you must pay them again. Also, the term of your loan will be extended to account for your missed payments and the interest accrued on them.

How many months can you be behind on your car payment?

If you don’t apply for a deferment and skip payments, lenders will wait about three amounts before repossessing you. Since repossessing a vehicle incurs costs for the lender, they may wait at least a month before taking action.

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