Auto lenders are allowing skipped payments, but beware of extra interest

Posted at 12:50 PM, May 04, 2020
and last updated 2020-05-04 17:53:26-04

With so many people out of work, some drivers simply can’t afford their car payments right now. So when an auto lender wanted to charge one local family thousands of dollars in interest charges over just one missed vehicle payment, Taking Action reporter Jackie Callaway stepped in to help.

ABC Action News first spoke to Michelle Sellars last month after reduced work hours left her and her family unable to pay several of their monthly bills.

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“Got to feed my kids – we still have two teens at home,” said Sellars.

There wasn't enough money coming in to cover the car payments on the family’s two sedans, so Sellars asked both lenders to allow her to defer one or two payments.

Honda quickly approved two deferred payments for the first car. The other auto finance company sent a letter approving one deferred payment, but warned the Sellars it would mean “additional interest” and a “balloon payment.”

Sellars said she did the math and it amounted to more than $7 a day for the next four years – or about $10,000 in interest for one missed payment. That’s when she tried to cancel the one deferred payment the company had offered.

“When they told me they were not going to cancel deferment I said, ‘You know what I am going to call Jackie,'” said Sellars.

Taking Action Reporter Jackie Callaway emailed and called Sellars’ auto lender.

The company did not respond to ABC Action News, but a week later the lender sent a letter offering an extra two weeks to make the monthly car payment without tacking on any extra interest.

Sellars said the news came as a great relief.

“If it had not been for you, I don't think they would have reversed,” Sellars told Taking Action Reporter Jackie Callaway.

When it comes to car payments, some auto finance companies are offering to defer one or more payments and tack those skipped payments on to the end of the loan.

But vehicles owners need to ask for the details in writing to make sure they are not on the hook for a huge jump in interest or higher payments.