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How to Defer a Car Payment

by Mary Yamin-Garone ; Updated November 27, 2018

You may have felt flush with cash when you first took out that auto loan, but occasionally things happen that force you to tighten your belt and “cut the fat” to weather the financial storm. For some people, that means deferring or postponing their car payments. While doing so can provide a brief respite, unfortunately not everyone is able to defer on their loan. The lender and the terms of the loan agreement determine eligibility.

Read the Fine Print

Deferring a car payment is not as simple as missing the repayment for a month or two then picking up right where you left off. Approved deferral applicants are granted a grace period before they are required to resume making payments but there may be some additional charges and penalties to pay for the privilege of deferring the loan. Plus, you still will be responsible for the full amount of your loan, so either your monthly payments will need to increase or the loan term will have to lengthen to enable you to meet your obligations. Be sure to read the small print in your contract so you understand the situation. In some cases, only the car payment is deferred, not the interest.

Ask About a Car Loan Deferment

Contact your financing company or lending institution and explain your financial situation. Ask if the terms of your car loan or leasing agreement will allow you to defer your car payments until you get back on your feet. Be ready to provide documentation verifying your employment status if you are unemployed. There likely will be some paperwork to fill out, deferring the car loan payments. Send the signed documents and any required fees to the loan company. Keep a copy for your records.

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Draw Up a Forbearance Agreement

Ask your loan officer to draw up a forbearance agreement. This document recognizes your financial hardship and offers a plan to resolve it. Most forbearance agreements establish a payment schedule for satisfying the debt. Be sure to verify the conditions of your forbearance agreement with your lender. Find out how many payments will be deferred, for example, if there is a charge to defer payments, when the payments are due, what the repayment schedule is for missed payments, and if your lender can stave off negative credit reporting while your payments are deferred. Free legal assistance is available for low-income individuals. Check your local telephone directory or call your state’s Bar Association’s Legal Assistance Hotline for more information.

Watch Out for Hidden Charges

Always check to see if any already imposed fees can be retracted and if your car payment can be deferred without other negative credit consequences, such as late fees and collection calls. If your loan service has made any promises in this respect, ask to have them put in writing. Read over all information before signing any documents. Only sign the paperwork when you fully understand the terms of your agreement and how they affect your ability to pay off your loan.

About the Author

Mary Yamin-Garone has been a freelance writer since 1980. Specializing in health, fitness and senior care, her work is featured on Work.com and SeniorHomes.com. She received the 2002 APEX Award for Publication Excellence for Magazine and Newspaper Writing. She holds a Bachelor of Arts in English and journalism from Albany State University.

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