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How to Temporarily Pause Auto Loan Payments Through Deferment

How to Temporarily Pause Auto Loan Payments Through Deferment

If you’re struggling to make your monthly auto loan payments, you may be able to get some temporary relief through a deferment program. Deferment allows you to temporarily pause or reduce your payments for a set period of time – usually 1 to 3 months. This can provide much-needed breathing room if you’ve experienced a financial hardship like a job loss or medical emergency.

Deferments don’t erase what you owe – the paused payments will be added to the end of your loan term. But they do help avoid delinquency and protect your credit score while you get back on your feet. Here’s what to know about deferment programs, how they work, and how to get auto loan payment relief.

What Is Deferment?

With a deferment, you make an agreement with your auto lender to temporarily pause or reduce your monthly payments. You’ll either pay no monthly payment or a smaller payment – often just the interest owed – for a set number of months. This allows you to free up cash flow in the short term.

Deferments are different from forbearances, which are another option for temporary relief. With a forbearance, you still owe the full monthly payment but can pay it later. Interest still accumulates.

An auto loan deferment essentially hits the pause button on your payments and prevents delinquency. But you still have to repay the full amount later. When the deferment period ends, any missed or reduced payments get tacked on to the end of your loan term.

How Does Deferment Work?

Here are some key things to know about how deferment works with auto loans:

  • You’ll need to proactively request a deferment from your lender – it’s not automatic. Many lenders have online forms, but you may need to call.
  • Deferments are generally 1 to 3 months long. Your lender may allow back-to-back deferments, but there’s often a limit per year or over the loan term.
  • You’ll typically pay either no monthly payment or a reduced payment during the deferment. This paused amount gets tacked onto the end of your loan.
  • Interest may still accrue depending on your loan. But unpaid interest often gets added to the principal balance instead of becoming immediately due.
  • Make sure you understand exactly when payments will resume and what those payments will be. Get this in writing from your lender.
  • At the end of the deferment, your monthly payment may be higher if interest accrued and was added to the principal.
  • You’ll need to meet eligibility requirements, like being current on your loan and experiencing a hardship.

Overall, think of deferment as pressing pause on your obligations temporarily – you’ll still need to repay the full amount owed over a longer period of time. It’s not a loan forgiveness program.

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What Are the Pros and Cons?

Deferring payments can be a helpful option if you’re facing financial challenges, but there are some potential downsides to consider:


  • Avoid missed payments and delinquency
  • Protect credit score from late payments
  • Pause payments immediately with a simple request process
  • More flexible than options like extending your loan term
  • Temporary payment relief during hardship
  • Interest may not accrue or capitalize during deferment
  • No fees for pausing payments


  • Total interest paid over loan term may increase
  • Loan length will be extended
  • May not be available if you’re already behind on payments
  • Monthly payment may rise after deferment
  • Deferments are limited to a certain number per year/term
  • Not a long-term solution – payments will need to be repaid

Overall, a deferment can be a useful short-term option if you need immediate relief. But it’s important to understand the tradeoffs and have a plan to repay the full balance.

Who Is Eligible for Deferment?

Deferment eligibility requirements vary by lender but often include:

  • Good standing on your loan – Most lenders require your account to be current with no missed payments.
  • Experiencing hardship – You’ll need to show financial difficulty due to circumstances like job loss, disability, medical costs, etc.
  • Written hardship request – Lenders typically require a written explanation of your situation and need for deferment.
  • No prior deferments – Lenders may prohibit back-to-back deferments or limit how many you can obtain.

Review your loan agreement and contact your lender to learn about specific qualifications for deferment. Having a good payment history and urgent financial need are generally key.

How Do I Request a Deferment?

Here are the basic steps to request and obtain an auto loan deferment:

  1. Contact your lender – Call or go online to begin the deferment process. Act quickly once you foresee the need for relief.
  2. Ask about eligibility – Confirm you meet any requirements around past payments, hardships, etc.
  3. Explain your situation – Be prepared to describe your financial hardship and need for temporary relief.
  4. Fill out forms – Your lender will have a deferment request form to complete. Provide details on income, expenses, and inability to pay.
  5. Submit hardship documentation – Include documentation like pay stubs, medical bills, etc. to back up your hardship case.
  6. Get written approval – Once approved, get written documentation from your lender outlining the terms before proceeding.
  7. Continue communicating – Keep your lender informed if your situation changes, like if you’re able to resume full payments early.

The faster you act and the more detail you can provide, the better your chances of getting approved for the deferment. Maintain open communication with your lender throughout the process.

Alternatives to Deferment

If you don’t qualify for deferment, there may be other options to make your payments more affordable. Consider discussing the following with your lender:

  • Forbearance – Allows you to temporarily pay a lower amount, then repay the difference later.
  • Extended loan term – Adds months onto your loan term to lower your monthly payment.
  • Changed due date – Adjusts what day of the month your payment is due.
  • Refinancing – Takes out a new loan with better terms to lower payments.

You can also try budgeting, picking up side work, cutting expenses, or borrowing from family and friends. Don’t immediately default on your loan – talk to your lender first.

Impact on Credit Score

A deferment can help protect your credit from the severe damage of a delinquent account and repossession. However, it’s not without consequences:

  • Your lender will likely report the deferment to the credit bureaus, which could negatively impact your score.
  • Late payments before or after the deferment still get reported and hurt your credit.
  • The increased loan length due to deferred payments can lower your credit mix.
  • Accrued interest can increase your credit utilization if it’s added to your balance.

On the other hand, deferment helps avoid the larger score drop of a 30/60/90-day late payment. Weigh options carefully and continue making at least minimum payments if possible.

Special Considerations

Some other factors to keep in mind with an auto loan deferment:

  • Read the fine print – Your loan agreement outlines key details on deferment terms, eligibility, and limits.
  • Budget for repayment – Make a plan to get back on track with payments once the deferment ends.
  • Consider loan type – Deferments may not be allowed on certain loans like leases, balloon loans, etc.
  • Check on insurance – You may need to maintain auto insurance coverage during the deferment.
  • Watch for fees – Some lenders charge processing fees for setting up a deferment.

Carefully review the specifics of your situation before moving forward with deferment. An auto loan deferment can provide temporary relief when you need it most, but it’s not a cure-all – you’ll still need to repay the loan.


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