I want to enable auto backup data feature on my VPS (or from my hosting control panel) but I heard that it will affect VPS performance or making websites load slower during the backup progress. Is that true?
It's true that performance can take a hit. It's for this reason that you want to ensure you're not giving your chosen backup solution free reins to use all of your server's resources (i.e. Disk I/O) throughout the process.
Can you let us know more about the backup solution(s) that you are considering? Is it a cPanel server with their built-in backup system, something that your provider offers you, etc.
Yes, any added server processes will have an affect on performance. Backups, while highly recommended for obvious reasons, will have one of the greatest performance penalties on the server.
The best way to minimize the impact is to configure the backup process not to use compression. This will, however, use more bandwidth (when configured for offsite/remote backup destinations) and occupy larger footprints in terms of disk space.
It's definitely worth planning for in advance of ordering/setting up the VM!
Stack's suggestion is actually pretty good. The weekend late at night are typically good days to do backups since most people will be asleep. Just remember to leave a notice in the week for those people.
What Stack said is absolutely right. At first, you have to find out that which country is your the main source of traffic. After that, implement back up at the mid-night of the main traffic country, which will minimize the affection of user experience.