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For the millions of Americans suddenly finding themselves without work, or with drastically cut hours, keeping up with car payments may be causing untimely strain on their financial wellbeing. In an effort to ease the stress that this may cause consumers, many automakers, their finance arms, as well as institutions that make car loans, are deferring payments for several months.
Under a deferment, your lender allows you a lower payment, or no payment at all, for several months. The expectation is you resume your regular payment after the deferment ends, with any skipped or reduced payments and fees if added to the end of your repayment period. The benefit of working out a loan deferment with your lender is your credit report will not show any delinquency, or adversely affect your credit score because the clause is built into the agreement.
If you are experiencing a temporary reduction in income and seriously doubt your ability to make payments on your loan, deferring may be a good idea. Other options may make more sense if your hardship continues beyond a few months such as selling your car and purchasing something less expensive or doing ride-share for a period of time until financially on good footing. If your payment is too large to manage and your car value is in-line with what is owed, refinancing your loan may reduce your payment by spreading the remainder of the principle due.
Car loan deferment is not the most ideal of situations, but under challenging circumstances, it may offer just the relief you need in order to get back on track with your payments while leaving your credit intact.