Most lenders allow you to defer one car payment per year, but this is not a universal right. The availability, frequency, and terms of a payment deferral (also known as a forbearance) are entirely at the discretion of your auto loan lender. The answer depends on your lender's specific policies, your loan agreement, and your payment history.
Typically, lenders grant deferrals for short-term financial hardships, such as a medical issue or temporary job loss. You must contact your lender directly to request this option; it is never automatic. Approval often requires you to be in good standing, meaning you haven't recently missed payments.
It's critical to understand how interest accrues during a deferral. In most cases, interest continues to accumulate on the loan principal. The deferred payment is not forgiven; it's added to the end of your loan term. This means you will pay more interest over the life of the loan.
| Lender Type | Typical Deferral Policy | Common Requirements | Key Consideration |
|---|
| Major National Bank | May allow 1-2 deferrals per 12-month period | Account in good standing, Proof of hardship | Deferred amount accrues interest, increasing total loan cost |
| Credit Union | Often more flexible, sometimes 1 deferral per year | Must be a member in good standing | May have more favorable terms than for-profit banks |
| Captive Lender (e.g., Toyota Financial, GM Financial) | Varies, often 1 deferral per loan term | Must apply before payment is late | May offer special programs during economic downturns |
| Online Lender | Policy can vary widely, case-by-case basis | Strong payment history often required | Less established policies, crucial to read the fine print |
| "Buy Here, Pay Here" Dealership | Rarely offered, high risk of repossession | Often not an option | Focus is on immediate payment; vehicle repossession is more likely |
Always get any deferral agreement in writing from the lender, specifying the new loan maturity date and the total revised interest cost. Explore alternatives first, like a revised payment plan, which might be less costly long-term.
