Taking out an auto loan to buy a new car means adding another bill to your monthly obligations. While you may have the finances to meet those obligations at the time you take out the loan, things can change. If you find yourself out of work or in debt due to medical bills or other unexpected costs, deferring your auto loan may be an option.
Lenders are more likely to offer this deal if you have made timely payments. It is usually only short-term, but being able to defer a few months of payments until the end of the loan can be all you need.
Here are some of the other benefits to deferring an auto loan.
- By deferring payments instead of getting behind, you won't have to pay late fees or risk having your vehicle repossessed.
- If you have some equity in your vehicle, you may be able to sell it during the deferment phase, providing you with the money to pay off the loan.
- Finally, it is possible to refinance your auto loan during deferment, offering you another way of lowering your debt obligations.
However, there are also a few downsides to deferring a few auto loan payments.
- The deferred payments are added to the end of the loan and must still be made.
- The lender may require you to pay the monthly accrued interest immediately.
- You may end up paying more interest over the life of the loan, because interest will grow on the outstanding balance of your loan - including your deferred payments.
Lenders only offer a few chances to defer payments, so be sure to stay on good terms with them. If you are interested in an auto loan, visit our curated list of top lenders.