How Does an Auto Loan Hardship Program Work?

How Auto Loan Hardship Programs Work

Depending on your lender, auto loan hardship options may include adjusting your payment due date, payment deferrals or extensions, temporary payment plans or permanent loan modifications. While the specifics vary from lender to lender, here are the most common options when you're suffering financial hardship.

Change Your Payment Due Date

Does your auto loan payment fall too close to another big bill, like your mortgage? If juggling too many payments at once is difficult, the fix could be as simple as changing your due date. You can typically request a due date change at your lender's website or by phone.

Changing your due date affects your loan maturity date and possibly the total interest you'll pay. Lenders may limit which due dates you can choose and how many times you can change a payment due date during your loan term.

Defer Your Loan

Also called loan extension, loan postponement or skipping a payment, loan deferment allows you to move one or more loan payments to the end of your loan and extend your loan maturity date accordingly. For example, if your loan was scheduled to be paid off on December 1, 2026, a two-month loan deferment would extend the payoff date to February 1, 2027. You'd skip two payments now and make them up at the end of the loan term. You'll also owe any additional interest that accrues over the longer loan term.

Each lender handles loan deferral requests differently. With some, you simply select the "skip a payment" option on their website or app. Others require submitting a hardship letter for approval. There may be other requirements, such as being current on your loan. You may be able to defer the entire payment or only the principal part of the payment. Lenders may also restrict how many times you can defer payment during the loan term.

Get a Payment Plan or Loan Modification

Payment plans are typically used when borrowers suffering temporary financial hardship are already behind on their loan payments. Your lender may adjust your auto loan payments, such as giving you the option to make partial loan payments or interest-only payments for a certain period. Unpaid amounts and any interest that accrues get added to the end of your loan term.

When you suffer permanent financial hardship, such as becoming disabled or losing your spouse, you may qualify for a loan modification. Your lender assesses your finances and permanently adjusts your loan agreement so you can pay off your loan despite reduced income.

You usually need to speak to your lender, complete an application and provide documentation of financial hardship to apply for a payment plan or loan modification.

Lenders may charge fees for auto loan hardship programs, and you may end up paying more interest than you originally would have. Ask your lender how an auto loan hardship plan could affect your credit report and credit score. Make sure you understand the terms of your hardship plan; get the details in writing.

Learn more: Steps to Take Immediately if You've Lost Your Income

Lenders That Offer Assistance

Ask your lender how they accommodate financial hardship or review our list of some top lenders' hardship programs.

• Alliant Credit Union offers qualifying customers reduced interest rates and payments for a limited time. Apply online or call 800-328-1935.
• Ally Bank offers loan deferment or, if you're facing ongoing hardship, loan modification. Learn more online or call 888-925-2559.
• Capital One allows you to defer payments or change payment due dates. Call 800-946-0332 for information.
• CarMax works with customers to arrange payment accommodations including extensions or due date changes. Call 800-925-3612 for information.
• Carvana's third-party loan servicer, Bridgecrest Credit Co., offers loan deferment to qualifying customers. Call 800-967-8526 for information.
• Chase lets eligible customers change payment due dates or apply for a payment extension. Learn more online or by calling 800-336-6675.
• Digital Credit Union offers loan deferment, interest-only payments or (for long-term hardship) loan modification. Apply online or call 800-328-8797.
• PenFed Credit Union offers financial hardship programs for eligible customers. Apply online or call 800-247-5626.
• Toyota Financial Services offers loan deferments. Call 800-874-8822 to discuss your situation.
• Wells Fargo's auto loan hardship programs include due date changes, loan deferment and payment adjustments. Call 800-289-8004 for information.

Learn more: How to Manage Payments if You're Unemployed

Alternatives if You Can't Afford Your Car Loan

A hardship program isn't the only option when you can't afford your auto loan. Here are some alternatives.

• Refinance your loan. Refinancing into a longer loan term can make your car payments more affordable. Before trying to refinance your loan, check your credit report and credit score. Taking steps to improve your credit score could help you qualify for more favorable loan terms. Experian's car payment calculator can help you compare loan options.
• Sell or trade in the car. Use Kelley Blue Book or Edmunds to check your car's value. If it's worth more than you owe on the loan, you can trade it in to a dealer and put your equity in the car towards a cheaper model. Selling your car to a private party requires more work on your part, but usually nets more money than trading it in.
• Increase your income. Find a side hustle, such as tutoring, freelancing, selling items online, dog walking or babysitting. Depending on your situation, you might be able to request overtime at work or get a part-time job.
• Ask family and friends for help. Is there a loved one in a position to help you out financially? Borrowing from friends or family could ease your cash crunch. Create a written loan agreement and pay back your loan as agreed to keep your relationship on good terms.
• Voluntarily surrender the car. You can prevent repossession by voluntarily surrendering your car to the lender, who will sell it and use the money to pay off your loan. Voluntary surrender has a severe negative impact on your credit score, but isn't quite as bad as repossession. However, if the lender doesn't make enough money from selling the car to pay off your loan, you'll still be responsible for the loan balance.

Frequently Asked Questions

The Bottom Line

Whether you've already missed a car payment or are just worried that you will, contacting your auto lender immediately can uncover a solution. Lenders don't want you to default on your auto loan and generally try to work with you if you're honest about your situation.

A car payment more than 30 days late can be reported to credit bureaus and have a significant negative impact on your credit score. Monitoring your credit, which you can do for free with Experian, can show you how your payments affect your credit score. By keeping tabs on your credit, you can take action to prevent additional damage.