Auto Loan Deferment Calculator

How Auto Loan Deferment Works

Auto loan deferment is the practice of temporarily pausing your auto loan payments while keeping the loan active. This can be useful in several situations:

Financial hardship where you can't make payments
Job loss or career transition
Temporary cash flow shortages
Planning a major purchase that will affect your budget

Most auto lenders require you to make up the deferred payments later, often with interest charges. Some lenders may charge a deferment fee.

How Deferment Affects Your Loan

When you defer payments, several things happen to your loan:

The loan balance continues to accrue interest
Your monthly payment amount increases when you resume payments
You may incur additional fees for the deferment period
The total interest paid over the life of the loan increases

Types of Auto Loan Deferment

There are typically two types of deferment:

Temporary deferment: Short-term pause (usually 30-90 days) with minimal impact
Permanent deferment: Longer-term pause (often 6+ months) with significant interest accumulation

Formula Used

The auto loan deferment calculator uses the following formulas to determine the impact of deferring payments:

Monthly Payment Calculation:

P = L × [r(1 + r)^n] / [(1 + r)^n - 1]

Where:

P = Monthly payment amount
L = Loan amount
r = Monthly interest rate (APR/12)
n = Number of payments

Total Interest Calculation:

Total Interest = (Monthly Payment × n) - Loan Amount

Deferment Impact Calculation:

New Monthly Payment = Original Monthly Payment × (1 + r)^d

Where d = number of deferred months

The calculator also accounts for any additional fees associated with the deferment period.

Worked Example

Let's look at an example to understand how deferment affects your loan:

Scenario

Loan amount: $20,000
Interest rate: 5% APR (0.4167% monthly)
Loan term: 48 months
Deferment period: 6 months

Original Monthly Payment

Using the monthly payment formula:

P = $20,000 × [0.004167(1 + 0.004167)^48] / [(1 + 0.004167)^48 - 1]

P ≈ $443.23 per month

After 6 Months of Deferment

The new monthly payment becomes:

New P = $443.23 × (1 + 0.004167)^6 ≈ $466.12 per month

Total Interest Paid

Original total interest: ($443.23 × 48) - $20,000 ≈ $1,015.52

After deferment: ($466.12 × 42) - $20,000 ≈ $1,238.44

This example shows that deferring payments increases both your monthly payment and total interest paid over the life of the loan.

FAQ

Can I defer my auto loan payments?: Yes, most auto lenders allow some form of payment deferment, though terms vary by lender. You should contact your lender directly to understand their specific policies.
How long can I defer my auto loan payments?: Deferment periods typically range from 30 days to 6 months, depending on your lender and the reason for deferment. Longer deferments may require approval.
What happens if I can't make up the deferred payments?: If you can't make up the deferred payments, your lender may repossess the vehicle or take other collection actions. It's important to communicate with your lender about your situation.
Are there fees for deferring my auto loan?: Some lenders charge a deferment fee, while others may simply charge interest on the deferred payments. Always check your loan agreement or contact your lender for details.
Will deferring my auto loan affect my credit score?: Payment deferment may be reported to credit bureaus as a late payment, which could temporarily lower your credit score. The impact varies by lender and your overall credit history.