by Byard Duncan, Ryan Gabrielson and Lucas Waldron

This story works best on ProPublica’s website, where you can use our free Car Loan Deferment Calculator. You can also read our investigation into Exeter Finance and get in touch with ProPublica reporters to share your own experience.

Have you taken out a car loan and struggled to pay it back? You’re not alone. Borrowers like you owe more than $1.6 trillion in auto debt, and many are falling behind. Your lender might have given you the option to move payments to a later date, also known as a “deferment” or “extension.”

We’ve collected advice from borrowers, consumer finance experts, auto dealers and more to help people make more-informed choices about deferring car payments. Our reporting shows lenders aren’t always up front about how much these deferments will cost you in the long run.

In 2018, one lender got into trouble for allegedly misleading borrowers about them. We found another company, Exeter Finance, using similar extension practices, driving struggling people deeper into debt. These deferments especially affect those with bad credit, who often must pay sky-high interest rates to borrow money.

Exeter Finance responded to our story saying it is “fully committed to transparency in its lending practices” and follows all relevant laws. But in dozens of interviews, people told us they did not understand how much more they would owe after they took deferments. At the end of their terms, some ended up with thousands of dollars in unexpected charges. Some defaulted and lost their cars anyway.

“If I would have known,” said Chassidy Smith, an Exeter borrower living in Georgia who received six extensions in the course of her five-year auto loan, “I probably would have done something different.”

What’s ProPublica? Why should I trust your research?

We (Byard Duncan and Ryan Gabrielson) are reporters at ProPublica, a nonprofit news organization. We write stories that hold powerful institutions accountable. We’ve been reporting on car loans for more than a year. In that time, we reviewed thousands of pages of lawsuits and complaints, and we spoke to dozens of borrowers, consumer finance experts, auto lending specialists, former Exeter Finance employees and more. All of our stories are rigorously fact-checked, nonpartisan and free to read. We do not profit in any way off of tools such as our loan extensions calculator. See our Code of Ethics for more.

The Car Loan Deferment Calculator

To calculate what you could owe at the end of your car loan, all you need is your contract, your monthly statement and the dates that you received deferments. Click here to use the free car loan deferment calculator on ProPublica’s website.

This is a screenshot of the calculator. Click here to use the calculator on ProPublica’s website. (Development by Chris Zubak-Skees for ProPublica. Design by Lucas Waldron.) Where to find information about your car loan:

Contract: If you don’t have a hard copy of your auto loan contract, you should be able to download a digital one from your lender’s website.

An excerpt of an Exeter borrower’s contract. (Obtained by ProPublica)

Dates of deferments: This should be the months covered by the deferments. Lenders sometimes send you written notices when they grant you deferments. You can also contact your lender’s customer service team and ask if you don’t remember.

Monthly statement: Our auto loan calculator is most accurate when you use your loan’s interest rate, which can be slightly different from the APR, or annual percentage rate. You’ll sometimes find the true interest rate on your monthly billing statement.

Got more questions? There’s no shame in feeling overwhelmed by the process. Even the experts sympathize.

“Auto transactions are notoriously complex and confusing,” said Rosemary Shahan, president and founder of Consumers for Auto Reliability and Safety, an advocacy organization. “There is nothing in life that prepares you for that transaction. It’s unlike any other transaction you ever enter into.”

Here are answers to some of the most common questions about car loan extensions that came up in our reporting.

Frequently Asked Questions about Car Loan Deferments What is a car loan deferment?

A car loan deferment is when a lender allows you to postpone one or more payments to a later date. Some borrowers said they chose to defer car payments when they faced unexpected expenses, like an illness, hurricane or death in the family. Others simply couldn’t afford their loans. Not all lenders allow you to defer payments, and different lenders have different rules. Some, for example, require you to make a certain number of on-time payments in a row before they will grant you a deferment.

Ask your lender what its specific deferment policies are. Get them in writing if you can.

What’s the difference between a deferment and an extension?

There is no difference. In fact, the Consumer Financial Protection Bureau, a federal watchdog agency, uses the terms interchangeably. “Deferment,” “deferral” and “extension” all mean basically the same thing: You’re pushing one or more loan payments to a later date.

How do car loan deferments work?

To understand what deferments do, you first have to understand how car loan interest is supposed to work.

Most car loans use a “simple interest” formula. This means that although you usually make a car payment once per month, you technically owe a little bit of interest for every single day of the loan. As a result, paying late can cause you to owe more later on.

On the other hand, paying early can reduce your balance faster. Imagine you won the lottery tomorrow and paid off the whole loan immediately. That would save you money because you’d pay a lot less in interest over time.

Let’s say you have a $15,000 loan with a hefty 25% interest rate that you will pay back over 72 months.

If you pay exactly on time, a typical daily simple interest car loan will look like this:

Note: This chart assumes that the borrower always paid on time and did not accrue late fees. (Lucas Waldron/ProPublica)

When you start off, more of your payment will count toward interest than principal (the amount you owe excluding interest) each month. That’s normal. Over time, this dynamic switches: By the loan’s endpoint (also known as its “maturity date”), you’ll pay mostly principal until you owe nothing at all. Then you get the title and own the car outright.

Deferments can change this equation. Let’s say you move a $404 monthly payment to the end of your loan several years from now. If your lender charges interest on the extension, as many do, you will owe more than $404 at the end of the loan: You will have to pay higher interest charges for the rest of the loan, so your remaining payments won’t be enough to eliminate your debt. You will still owe hundreds, or even thousands, of dollars.

Note: This chart assumes that the borrower always paid on time and did not accrue late fees. (Lucas Waldron/ProPublica)

This leaves some people with a “balloon payment” — a large lump sum, due when your loan term ends. These balloon payments caught a lot of Exeter borrowers we spoke to by surprise and caused them financial pain.

Who decides if I can defer a car payment?

It’s important to remember that the company selling you the car is often different from the company that will be collecting the payments. In fact, several experts told us that If you decide to take out a loan, you’re under no obligation to choose financing at the dealership, even if you buy the car there.

If you’re making monthly car payments, there’s a good chance the dealer “assigned” the contract to an auto lender like Exeter Finance (or Santander Consumer USA or Capital One) after you signed on the dotted line. The lender is the entity you’re now paying back — and the one that might grant you a deferment.

Will deferred car payments cost me money?

Deferments can cost you more money in the long run, but the exact amount is not always obvious to borrowers. As mentioned above, deferments provide a temporary break from monthly payments. But if interest continues to accrue during that reprieve, you will end up paying higher interest charges and then owing more in a lump sum at the end. For Exeter borrowers who received multiple extensions, the final payment totaled thousands of dollars.

Should I take a deferment on my car loan?

Consumer finance experts told us it depends on several factors. Overall, you should think about it in terms of your broader financial health.

“It’s not just the cost of the monthly payment — it’s all of this other stuff,” said Dara Duguay, CEO of the nonprofit Credit Builders Alliance. “Can you afford gas? If — and especially if — gas is going to fluctuate up and down?”

“It’s tempting to just say, ‘Oh yeah, let’s just add it to the end,’” said John Van Alst, director of the National Consumer Law Center’s Working Cars for Working Families project. But “if the numbers weren’t working before — unless something’s changed — there’s a real chance the numbers aren’t going to work as you continue to go forward.”

Some borrowers told us they regretted their decisions to accept deferments. Some didn’t. But nearly everyone we spoke to wished they’d had more information.

“I would have tried to make arrangements” like making extra payments, said Natosha Smith, an Exeter borrower living in Georgia whose eight car loan extensions led to a balloon balance of roughly $6,000. “I honestly did not understand the full complexity of the situation.”

What questions should I ask before taking a deferment?

If you’re considering deferring a car payment, experts say you need to get as much information about the cost as possible.

Pamela Foohey, a University of Georgia law professor who studies subprime lending, said lenders would ideally give borrowers a table explaining what they will owe each month until the end of the loan. She said the table should lay out “exactly what is going to be paid, broken down by principal and interest.”

Foohey also recommended asking for:

• Your new loan maturity date.

• An explanation of any fees or penalties.

• Any changes to your monthly payment amount.

• A breakdown of what will be going to principal versus interest for all future payments.

Get familiar with your other financial obligations, too, said Barry Coleman, vice president of program management and education at the National Foundation for Credit Counseling. Ask yourself: Will I have to skimp on necessities to stay in the car? Is the deferment to cure a one-off problem, or am I postponing payment because the car wasn’t affordable in the first place?

“Do a budget,” Coleman advised. “Know what your expenses are and whether or not an extension is necessary. Maybe you’re able to make some adjustments in other parts of your budget, where you don’t have to get this extension.”

Will deferring a car payment hurt my credit?

In most cases, deferments do not negatively affect your credit score. This is because they are not the same as late payments. Instead, they represent a mutual agreement between you and your lender. But be aware that you can hurt your credit by failing to restart payments when they become due again — or by failing to pay off your balloon balance.

I can’t make my car payment. What can I do besides deferring a payment?

You may have options. Experts we spoke to said the first thing to do is call your lender. Different banks have different repayment policies, and trying to adjust your agreement proactively is often a good bet.

“View the extension offer as the beginning of a negotiation,” Foohey said. “It is not the thing that you absolutely have to take.”

The CFPB also lays out a few options to avoid deferring a car payment:

• Ask to change the date your payment is due each month. For some people, paying off a car loan consistently is all about timing. If it’s more convenient for you to be billed right after you receive a paycheck, tell your lender that. Ask if they can change your due date to better match the rhythm of your income.

• Request a payment plan. Rather than extend your loan, some lenders will allow you to pay a smaller monthly payment for a while, then increase your bill totals later to balance things out. If you choose to do this, make sure to ask your lender for a written breakdown of how the payment plan will work and how it would change the interest charges.

• Refinance your loan. Refinancing means looking for a bank that will buy the debt from your auto lender and continue working with you at a lower interest rate. Working out an arrangement like this can bring down both your monthly payment and the total amount you’ll owe in the long term. But be aware that refinancing often requires a steady payment history or good credit.

There are also lots of credit counseling nonprofits across the U.S. that can help advise you.

• The Credit Builders Alliance has more than 600 members and a handy map to find one near you.

• The National Foundation for Credit Counseling is the country’s oldest nonprofit “dedicated to improving people’s financial wellbeing.”

What should I do if I can’t afford to pay back interest on my deferment?

If you’ve made a lot of on-time payments in a row, there’s a chance you’ve improved your credit score along the way. In that case, consumer finance experts say it’s worth reaching out to a bank or credit union to see if they might refinance your loan.

Not everyone can do this, though. Once the true cost of car loan deferments became clear to some of the borrowers we interviewed, they saw no choice but to let their car be repossessed. Repossessions and late payments hurt your credit score, and damaged credit can keep you from getting a low interest rate on your next car loan.

One silver lining: If you surrender your car, it’s possible you won’t end up owing the total remainder of the loan. That’s because after a lender auctions it off, they’re usually required to charge you only the difference between what you owe and what they got at auction. But beware: If your loan remainder was bigger than the car’s actual value, there’s a chance you could still owe a sizable chunk of change after this.

I think my lender didn’t give me information they were supposed to. Is there anything I can do?

First, you can try to work something out with them. According to CFPB, “Companies can usually answer questions unique to your situation and more specific to the products and services they offer. Keep all the documents, messages, voicemails, and records of your interactions with the dealer or lender.”

If that doesn’t work, you have the right to file a complaint to state and federal regulators.

• The CFPB accepts complaints here.

• You can use this database to find your attorney general’s contact information. In addition to fielding complaints, your attorney general can sometimes help answer questions about your state’s car loan laws.

• If you’d like to find an attorney with affordable fees, CFPB maintains a state-by-state list of them here.

• CFPB also has a searchable “know your rights” database that answers lots of questions about car loans.

• Finally, if you want to understand the federal laws that apply to your car loan, the National Automobile Dealers Association has an easy-to-understand primer.

AAuto contracts often include class-action lawsuit waivers and arbitration provisions. These can make it hard for people to sue lenders.

For this reason, a lot of recent legal action against auto lenders has come from the CFPB and state attorneys general. When those agencies sue a company, it can sometimes result in a monetary settlement for people harmed. It can also wipe away borrowers’ debt and prevent their cars from getting repossessed.

Common Car Loan Terms

Amortization: The process of reducing a debt through regular payments.

Amount financed: The amount of money you’ve borrowed.

Amount of payments: What you’ll owe each time a payment is due.

Annual percentage rate: The cost of your loan, including interest rate and fees. It’s usually expressed as a percentage.

Balloon payment: A one-time, lump sum charge including any money you still owe on principal or fees, due at your loan’s maturity date. This is typically the result of extensions and late payments.

Debt-to-income ratio: The amount of money you owe for housing, credit card and all other loan payments divided by the amount of money you make each month (before taxes). 

Down payment: The up-front payment you put down when you buy your car. The more you can put down, the cheaper your loan will be in the long run.

Extension/deferment: A postponement of one or more payments on your car loan.

Finance charge: The total dollar amount of interest you’ll owe if you make every payment on time.

Interest: The cost of borrowing money. This is usually a percentage of the unpaid debt that accumulates on a daily, monthly or annual basis.

Loan term: The amount of time it will take to completely pay off your loan. Usually measured in months: 48-, 60- and 72-month terms are common.

Loan-to-value ratio: The amount you borrowed to purchase the car divided by the car’s current value.

Negative equity: When the amount you owe to your lender exceeds the value of your car. This is also called being “upside-down” or “underwater” on your loan.

Number of payments: This usually equals the number of months your loan will last. Occasionally, car loan payments are due every two weeks. You can make sure by checking for the term “monthly” under “When Payments Are Due” in your Truth-in-Lending Disclosures. 

Principal: The total dollar amount you borrowed, and have not yet repaid, before interest is calculated. If you bought a car for cash, you’d be paying just the principal.

Refinancing: The process of taking out a new loan — sometimes with your current lender, sometimes with a new one — to pay for your existing one. People often refinance to get more favorable terms, like a lower APR.

Repossession: When a lender seizes your vehicle because you’ve missed several payments, typically the equivalent of four months. Lenders have different rights of repossession in different states.

Total of payments: The combination of the amount of money you borrowed and what you’ll owe in interest on the loan.

Total sale price: The total of payments plus the down payment you made.

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Development by Chris Zubak-Skees. Research by Sophia Kovatch.

This post was originally published on ProPublica.