How Do I Get My Car Payment Deferred?

Car payment deferral allows borrowers to postpone monthly payments without defaulting on their loan. Lenders typically offer this option for short-term financial hardships, such as unexpected medical expenses or job loss. This temporary relief can vary from one to several months, depending on lender policies.

Assessing Eligibility and Preparing Information

Before contacting a lender about car payment deferral, it is important to understand the common eligibility criteria and gather necessary documentation. Lenders generally require the loan account to be in good standing, meaning timely payments and current status. Some lenders also have specific requirements regarding how recently a deferment was granted, with policies varying from one deferment over the loan’s lifetime to two per calendar year.

The primary reason for seeking deferral is typically a short-term financial hardship. Examples include a sudden job loss, a temporary reduction in income, or unexpected significant expenses like medical bills or major home repairs. It is important to be prepared to explain the nature of this hardship to the lender.

To streamline the process, gather specific information and documents beforehand. This includes your personal identification, your car loan account number, and the lender’s name. For proof of hardship, you might need to provide a layoff notice, medical bills, or other documentation supporting your financial difficulty. Additionally, having current income and expense information available can help demonstrate your financial situation.

Navigating the Application Process

After assessing eligibility and compiling relevant information, contact your lender to apply for a car payment deferral. It is advisable to reach out as soon as you anticipate difficulty making a payment, rather than waiting until the payment is overdue.

Lenders have various methods for deferral requests, ranging from an online “skip a payment” option to a formal written request or hardship letter. If a letter is necessary, it should explain your situation, your loan identification number, and when you anticipate resuming regular payments.

The lender will then review your request, and if approved, you will likely need to sign a forbearance or deferment agreement. This contract outlines the terms of the deferral, including the duration of the payment pause and the agreement to resume payments once the deferral period ends. The process from initial contact to approval or denial notification can vary, but having all documentation ready can help expedite it.

Understanding Deferral Implications

Once a car payment deferral is granted, the missed payments are typically not forgiven but are instead added to the end of your loan term. This extends the overall repayment period for your loan. For example, if two payments are deferred on a 36-month loan, the loan term could extend to 38 months.

A significant implication of deferring payments is the continued accrual of interest on the outstanding loan balance during the deferral period. Car loans often use a simple interest formula, where interest accumulates daily based on the unpaid principal. This increases the total interest paid over the loan’s life, making it more expensive overall. Additional interest can be higher if deferral occurs earlier in the loan term when the principal balance is larger.

Regarding credit reporting, deferring payments generally does not negatively impact your credit score as long as the deferral is approved by your lender and you adhere to the agreed-upon terms. Lenders report these deferred payments as “paid as agreed” to credit bureaus. However, failing to make payments before receiving approval or not adhering to the new terms after deferral can severely impact your credit score, as payment history is a significant factor in credit calculations.