A deferment payment lets you skip or reduce a payment now and add it to the end of your loan instead of paying interest on the delay
A deferment is an agreement with your lender to postpone a payment you owe. Instead of paying now, you push that payment to the back of your loan term—meaning you'll make it later, usually after all your regular payments are done. The key difference from a late payment: the lender agrees to it in advance, so there's no penalty, no interest charge on the missed amount, and no damage to your credit report.
Deferment works differently depending on the loan type. On federal student loans, interest may or may not accrue during deferment—that depends on the loan type and the reason for the deferment. On mortgages and car loans, deferment typically means those skipped payments get added to the end of the loan, extending your payoff date. On credit cards and personal loans, deferment is less common and usually requires negotiating directly with the lender.
The catch: you're not erasing the payment, you're moving it. You'll still owe the full amount, and your loan will take longer to pay off. If interest accrues during the deferment period, you'll pay more total interest over the life of the loan.
Key Takeaways
- Deferment postpones a payment you owe now and adds it to the end of your loan term, with no late fee or credit damage if approved in advance.
- Federal student loans have formal deferment programs with specific reasons (economic hardship, unemployment, military service) that determine whether interest accrues during the deferment period.
- Mortgage and car loan deferments typically extend your loan term by the number of months deferred, so you pay longer but your monthly payment stays the same.
- You must request deferment before you miss a payment—asking after you're already late may be treated as a late payment arrangement instead, which can still affect your credit.
- Interest behavior during deferment varies by loan type and program, so confirm with your lender whether interest will accrue on the deferred amount.
How deferment works on federal student loans
Federal student loans have formal deferment programs built into the loan terms. If you meet the criteria for one of the approved reasons, you can request deferment directly from your loan servicer—the company that collects your payments. The approved reasons include economic hardship, unemployment, enrollment in school at least half-time, military service, Peace Corps service, and a few others that vary by loan type.
During deferment on federal loans, subsidized loans do not accrue interest—the government covers it. Unsubsidized loans and PLUS loans do accrue interest, meaning the unpaid interest gets added to your principal balance. This is why the type of loan matters: if you defer an unsubsidized loan for six months, you'll owe more at the end of the deferment period than you would have if you'd kept paying.
You request deferment through your loan servicer's website or by phone. The servicer will ask for documentation of your reason—a layoff notice for unemployment, a letter from your employer for economic hardship, or proof of enrollment for school deferment. Approval usually takes two to four weeks. Once approved, your monthly payment is suspended for the deferment period, which can last anywhere from a few months to several years depending on the reason and your circumstances.
How deferment works on mortgages and car loans
Mortgage and car loan deferments work differently than student loans. When you defer a payment on a mortgage or car loan, the lender agrees to let you skip one or more monthly payments, and those skipped payments get added to the end of your loan. Your monthly payment amount stays the same, but your loan term gets longer.
For example: you have a 30-year mortgage with 25 years remaining and you defer three months of payments. Instead of paying off the loan in 25 years, you now pay it off in 25 years and three months. The three skipped payments are due at the end, either as a lump sum or spread across the remaining payments. Interest continues to accrue on the deferred amount, so you'll pay more total interest over the life of the loan.
To request deferment on a mortgage or car loan, contact your lender directly—usually the bank or loan servicer listed on your statement. You'll need to explain your hardship and show that you can resume regular payments after the deferment period ends. Lenders are more likely to approve deferment if you've been paying on time and the hardship is temporary. Approval timelines vary, but most lenders respond within one to two weeks.
Deferment versus forbearance and late payment arrangements
Deferment is often confused with forbearance, which is similar but not identical. In forbearance, you also postpone payments, but interest usually accrues on all loan types, and the deferred payments may be added to the end of the loan or rolled into a modified payment plan. Forbearance is often used when you don't meet the formal criteria for deferment, or when deferment isn't available. Both protect your credit if approved in advance.
A late payment arrangement is different: this is what happens when you've already missed a payment and you negotiate with the lender to catch up. Late payment arrangements may involve paying the missed amount in installments over a few months, or rolling it into your next regular payment. Unlike deferment, a late payment arrangement can still show up on your credit report as a late payment, even if the lender agrees to it.
The timing matters. If you contact your lender before your payment is due and request deferment, you're protected. If you miss the payment and then ask for help, the lender may treat it as a late payment arrangement instead, and your credit report may reflect the missed payment. Always reach out before the due date if you know you can't pay.
What happens to interest during deferment
Interest behavior during deferment depends on the loan type and the deferment program. On federal student loans, subsidized loans do not accrue interest during deferment—the government pays it. Unsubsidized loans and PLUS loans accrue interest, which gets added to your principal. This means your loan balance grows even though you're not making payments.
On mortgages and car loans, interest accrues during deferment on the full outstanding balance, including the deferred payments. The deferred payments themselves also accrue interest. This is why deferment extends your loan term: the lender needs the extra time to collect the interest that accumulated during the deferment period.
Before you request deferment, ask your lender directly: "Will interest accrue on my loan during deferment?" Get the answer in writing if possible. Some lenders offer deferment programs where interest does not accrue, but these are less common on mortgages and car loans. Knowing whether interest accrues helps you decide whether deferment is the right choice for your situation.
How to request deferment and what to expect
The process for requesting deferment varies by lender, but the basic steps are the same. First, contact your lender or loan servicer before your payment is due. You can usually find the phone number on your statement or the lender's website. Explain your situation and ask whether deferment is available for your loan type and reason.
Second, gather documentation. For federal student loans, you'll need proof of your reason—unemployment paperwork, a hardship letter, or proof of enrollment. For mortgages and car loans, lenders typically ask for a written explanation of your hardship and proof that you can resume payments after the deferment period. Some lenders ask for recent pay stubs, tax returns, or a bank statement to verify your financial situation.
Third, submit your request. Most lenders accept requests online through their website, by phone, or by mail. Online submission is usually fastest. After you submit, the lender will review your request and send you a decision letter. This typically takes one to four weeks. The decision letter will state the deferment period, the number of payments deferred, and what happens to those payments (added to the end of the loan, rolled into a modified plan, etc.).
Once deferment is approved, your payments are suspended for the agreed period. Mark your calendar for when the deferment ends so you know when to resume payments. Some lenders send a reminder; others don't. If you miss the first payment after deferment ends, it will be treated as a late payment.
When deferment affects your credit and when it doesn't
Deferment approved in advance does not damage your credit report. The deferment itself is not reported as a missed payment or delinquency. Your credit score should not drop because of an approved deferment.
However, deferment can indirectly affect your credit in one way: if you have unsubsidized student loans or a mortgage or car loan where interest accrues during deferment, your loan balance grows. This increases your credit utilization ratio (the amount you owe versus your credit limit), which can lower your credit score slightly. The effect is usually small and temporary—your score typically recovers once you resume payments and start paying down the balance.
If you miss a payment and then ask for help, and the lender treats it as a late payment arrangement rather than deferment, it will show up on your credit report. This is why timing matters: request deferment before the payment is due, not after.
Frequently Asked Questions
Can I defer a payment on a credit card?
Credit card deferment is rare and not a standard feature. If you're struggling with credit card payments, contact your card issuer and ask about hardship programs, which may include reduced payments, lower interest rates, or a payment pause. These are negotiated case-by-case and are not the same as formal deferment. Late fees and interest may still accrue depending on the program.
What happens if I can't resume payments after deferment ends?
Contact your lender before the deferment period ends and explain that you still can't pay. You may be able to request another deferment period, a forbearance, or a modified payment plan. The longer you wait after deferment ends, the harder it is to avoid a late payment on your credit report.
Does deferment mean I don't have to pay the money back?
No. Deferment postpones payment, it doesn't erase it. You still owe the full amount, and it will be due either at the end of your loan term or as part of a modified payment plan. If interest accrued during deferment, you'll owe more than the original amount.
Can my lender deny my deferment request?
Yes. On federal student loans, if you meet the criteria for a formal deferment reason, the lender must approve it. On mortgages and car loans, deferment is discretionary—the lender can deny your request if they believe you won't be able to resume payments or if your loan doesn't may have access to. A strong payment history and a temporary hardship improve your chances of approval.
How long can I defer a payment?
On federal student loans, deferment periods vary by reason—unemployment deferment typically lasts up to three years, while economic hardship deferment can last up to three years as well. On mortgages and car loans, lenders typically allow deferment of one to six months, though some programs allow longer periods. Ask your lender what the maximum deferment period is for your loan.