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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.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
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Loveth Okpedo
2024-03-12
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Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

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:

Pros:

  • 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

Cons:

  • 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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