For now, your finances are on track. The credit card bills are manageable. Your loan payment fits the budget. But then something shifts: Your hours get cut, or your company announces layoffs. Maybe your car breaks down and the repair wipes out your emergency fund.
For millions of Americans living paycheck to paycheck — about 40%, according to a 2025 Goldman Sachs study — it doesn’t take much to throw things off balance. One missed shift or unexpected expense can make it impossible to keep up with monthly payments.
If you can’t afford your personal loan payments, you may be eligible for a deferment. Learn how personal loan deferments work, and what other options may be available if you need some financial relief.
With a personal loan deferment, the lender agrees to allow you to pause your payments for a short period. During this time, which usually lasts one to three months, you don’t have to make any payments. Interest continues to accrue, and the months deferred are added to the end of your repayment term.
The payment pause gives you some time to get back on your feet. During the deferment, you can better your finances by searching for a new job, downsizing your home, getting a roommate, or overhauling your budget.
Once the deferment ends, your normal payments will resume.
Related: Can you pause credit card payments?
A personal loan deferment can give you some breathing room in your budget when you’re dealing with a temporary financial setback. But, there are some downsides to keep in mind:
Provides temporary relief: Worrying about payment due dates when your budget is stretched thin can be stressful. By deferring your loans, you have time to get your finances in order.
Allows you to focus on other priorities: Without the loan payment, you can focus on other financial priorities, like your rent or utility bills.
Protects your credit: Missing a payment can significantly damage your credit. If you defer your payments, there’s no damage to your credit since your lender agrees to the postponement.
Interest continues to accrue: While the loan is in deferment, interest typically accrues even though you aren’t making payments. Your balance will grow, and you’ll owe more once normal payments resume.
Offers limited help: Deferments are usually short-term options, and you can often only pause your payments for a few months. If you’re facing an extended hardship, a deferment may not be very helpful.
Lenders may not offer it: Not all lenders offer deferments. And, for those that do, eligibility is usually determined on a case-by-case basis.
Related: Burned by a bad loan? Here’s how to recover.
If you’ve weighed your options and decided a deferment is best for you, follow these steps:
Gather documentation: Save time by collecting the necessary documents in advance. Depending on the lender, you may be asked to submit documentation for your financial hardship. Potential documents to collect include:
Employment discharge letter or unemployment benefits letter
Evidence of reduced income, such as recent pay stubs
Documentation of a disability or long-term illness, such as hospital bills
Obituary or death certificate of the household wage earner
Divorce decree or separation agreement
Repair bills after a natural disaster
Contact your lender as soon as possible: The sooner you contact your lender, the more options you’ll have. If your account is in good standing and you haven’t missed a payment yet, the lender is more likely to work with you to find a solution.
Explain your situation: Be candid about what’s going on and how your finances have been affected.
Ask about all options: Even if you want a deferment, ask about all your options. You may be able to take advantage of other financial relief that provides longer-term results.
Request written confirmation: If you defer your loans, request a written confirmation of the deferment.
Mark down the end of the deferment: Once you’ve received the written confirmation, make a note and set a calendar reminder for when the deferment ends and when your payments will resume so you won’t accidentally miss a due date.
Develop a repayment plan: Next, create a plan to get your finances in order so you can resume payments once the deferment ends. This may involve credit counseling with a nonprofit agency, selling unused items to pay down debt, or picking up a side gig.
Related: Debt settlement pros and cons: Is it the right move for you?
Depending on your lender, you may have other options for managing your personal loan besides a deferment. Common financial relief programs include:
Some lenders have an interest-only payment plan. With this option, you make payments that cover only the loan’s interest for a limited period. Your payments are significantly reduced, but your smaller payments prevent the loan balance from growing due to interest, like it would with a deferment.
An interest-only plan is usually for a longer period than a deferment, so you may be able to make a smaller payment for three to six months.
If your financial hardship is more than just a temporary setback and you need long-term help, a loan modification may be an option. With a loan modification, the lender changes the terms of your loan to give you a more manageable payment. For example, you may be able to extend the loan term to get a lower payment, but you will pay more interest over time.
If you haven’t missed any payments and have good credit, another option is to refinance your personal loan with another lender. If you have strong credit (or a creditworthy co-signer), you may be able to qualify for a new loan with lower rates or different terms, thereby reducing your payments.
Related: Can you cancel a personal loan? Here’s when it might be possible.
As long as the lender has agreed to it, a loan deferment doesn’t affect your credit score. The only way your credit would be damaged is if you miss your scheduled payments.
Eligibility requirements vary by lender, but you may be eligible for a loan deferment if you’ve suffered a significant financial setback. This could include situations such as losing your job, having your hours reduced, owing a major medical bill, or having your home damaged in a natural disaster.
Your lender may offer other options, such as interest-only payments or a loan modification. If those aren’t options, another path forward is to talk to a debt counselor from a nonprofit credit counseling agency; NFCC.org is an excellent resource.
