What You Need to Know About Car Payment Breaks

Leland Terry
Published Sep 4, 2025


Taking a break from your car payment might seem like a relief when times get tough, but it could end up costing you more in the long run. 

Many people find themselves struggling to pay back their car loans, contributing to over $1.6 trillion in auto debt in the U.S. 

Sometimes, lenders offer the option to postpone payments, a practice known as a "deferment" or "extension." However, these breaks aren't always what they seem.

Dig deeper: Need to Skip or Delay Your Car Payment? Here’s What You Can Do
 

The Hidden Cost of Pausing Your Car Payments


Though it might feel like a momentary solution, deferring your car payments can lead to owing a significant amount more due to ongoing interest accumulation. Especially for those with less-than-perfect credit, this can mean facing sky-high interest rates and deeper debt.

One company, Exeter Finance, has been spotlighted for potentially misleading practices around these extensions, suggesting that not all borrowers fully understand the implications. 

Some folks end up with unexpected, large sums to pay at the end of their loan period, sometimes costing thousands more than anticipated.
 

Understanding Your Auto Loan Better


There are potential added costs of extending your payments, accounting for interest and time.
 
  1. Original Loan Amount: The sum you borrowed.
  2. Interest Rate: The rate at which interest accrues on your loan.
  3. Original Loan Term: How long you have to pay back your loan.
  4. Deferment Periods: Times when you didn't make a payment, pushing it to a later date.
 

Common Questions and Clear Answers

 
  • What's a Deferment? It's when your lender lets you skip a payment or two, shifting them to the end of your loan period.
  • What's the Impact? Though it offers short-term relief, deferments can increase the total amount you owe due to continued interest accumulation.

Our goal is to empower borrowers with knowledge so they can navigate auto loans more confidently and avoid surprises down the line.

-

Get the latest on auto loan relief and other tips by subscribing to our weekly newsletter here!

Related Articles

Auto Loan Interest Tax Deduction: What You Need to Know...

Buying a new car can be expensive, but there’s some good news for future buyers. Starting in 2025 and through 2028, you may be able to deduct up to $10,000 a year in interest paid on certain new car loans when...

How to Save Money on Your Car Insurance...

If you’ve noticed your car insurance costs going up, you’re not alone. On average, people in the U.S. are paying more for car insurance each year. In some states, the yearly premium can be over $3,500, and in places lik...

Thinking of Buying an Electric Car? Act Fast Before Tax Credits End...

If you’re considering buying an electric car, now is a good time to act. The federal government’s tax credit for electric vehicles (EVs) will end on September 30, 2025. Until then, you can...

What You Need to Know About Trump’s Car Loan Interest Deduction...

Congress passed a new tax law as part of the "One Big Beautiful Bill Act," signed by President Trump on July 4, 2025. This law lets people deduct up to $10,000 per year in car loan interest paid ...

How New Tariffs Are Changing Things for People Wanting to Buy Cars...

The car industry is facing more changes as it deals with new tariffs (which are special taxes on goods brought into a country) and adjustments to how the government helps people afford vehicles. If you...

TANF Cash Assistance: Can It Help Cover Your Auto Loan in July 2025?...

Temporary Assistance for Needy Families (TANF) is a crucial support system for families struggling financially across the United States. This program, funded by the federal government but managed by ...