84-Month Auto Loan

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Getting an 84-month auto loan can help you save money on your monthly payments. However, you will pay more interest during the loan’s life than if the repayment plan is shorter. Many people utilize auto loans to finance new or used car purchases.

84-Month Auto Loan

Most automobile loans range in length from 36 months (three years) to 84 months (seven years). For certain drivers, an 84-month car loan may be the best option. However, long-term auto loans tend to cost more over time than short-term loans. Before signing the paperwork for an 84-month auto loan, you should understand the advantages and downsides of this plan.

What is an 84-Month Auto Loan

An 84-month auto loan is a seven-year loan that operates similarly to other auto loans. When you acquire a new or previously owned car from a seller, the cost of the purchase is financed with a loan that you repay over 84 months with interest. Additionally, the interest rate on a loan is influenced by various factors such as the bank or lender, credit score, car purchase cost, and income.

Unlike shorter-term loans of 36 or 48 months, 84-month loans are frequently less common. Although shorter-term loans have higher monthly payments, drivers end up paying less in interest because of the shorter loan time. With an 84-month loan, you can extend its term by making larger payments. Although the monthly payments become more manageable as a result, drivers may end up paying more in the long run due to the cumulative cost of interest.

Benefits of an 84-Month Auto Loan

Although it’s not the best option, taking out a vehicle loan for 84 months has certain benefits. The following are some advantages of a long-term loan:

Reduced monthly payments

A long-term loan may be the best option for you if you need to buy a reliable car but have a limited budget. Because you pay off an 84-month loan over seven years, the monthly payment is usually low.

Decreased debt-to-income ratio

This type of loan can help you reduce your debt-to-income ratio by requiring fewer monthly payments. Your debt-to-income ratio is the percentage of your monthly income spent on debt repayment. It is easier to qualify for future loans, especially ones with better terms, if your debt-to-income ratio is low.

Refinancing

Refinancing involves replacing an existing loan with a new one that typically has better conditions and lower interest rates. If you are approved for a better loan with better terms, you will have plenty of opportunity to refinance later on because 84-month loans allow you to pay off the loan gradually.

Disadvantages of an 84-Month Auto Loan

Taking out an 84-month auto loan has some serious disadvantages. Think about these drawbacks before selecting this option:

High interest rates

Unlike a loan with a shorter period, an 84-month loan will probably cost more. Your monthly payment will be smaller, but the interest will accrue over a longer period of time.

Years of vehicle payments

An 84-month auto loan means that you will have to make long-term automotive payments. There are several ramifications for this. One possibility is that you may decide you no longer desire the vehicle. Alterations in your financial status may also make it more difficult for you to make the payments. Even if you can sell an automobile with a lien, you usually have to settle the outstanding amount first.

Depreciation

Over the course of 84 months, your car will most likely lose a sizable portion of its value due to natural depreciation. This may lead to paying more than the car is worth, a condition known as negative equity. Selling your car to pay off your debt can be a challenging and costly process if you have negative equity.

Where an 84-Month Auto Loan is Available

84-month auto loans are now more popular than they formerly were. They are still less popular among lenders than maturities of 24 to 72 months, nevertheless. For a vehicle loan of 84 months, you have several choices.

Banks

When consumers are looking for auto loans, traditional banks are frequently their first port of call. It’s advisable to check if your bank offers 84-month financing, as many of the largest banks do. Banks may offer discounts on auto loan rates for customers with financial accounts such as checking, savings, or credit cards. The ease of having all of your banking in one location is something to think about, even if your bank doesn’t.

Credit unions 

Many of the benefits of commercial banks are also provided by credit unions, which are member-based institutions. Credit unions offer low interest rates and minimal costs, but members must meet membership requirements to use their lending products. Membership in a credit union requires specific company employment, donating to a recognized charity, and paying membership dues. Many are national in scope and include 84-month vehicle loans in their portfolios.

Online lenders

An 84-month loan can also be obtained digitally. Online lenders are growing in popularity as a form of finance as more and more individuals browse for cars online. There are numerous options available with extended loan terms. Furthermore, the lack of physical branches does not mean that internet lenders are untrustworthy service providers. Many have the backing of well-known institutions, and some even act as a larger bank’s online lending face.

Marketplaces for loans

When using a lending marketplace, you submit your information through a portal and wait for loan offers rather than applying directly to individual lenders. This method not only saves time but also allows you to compare loan offers in one location. To effectively utilize these marketplaces, it is crucial to conduct thorough research on lenders, as you may receive proposals from both reputable and less respected ones.

Auto dealerships

A large number of auto dealers offer 84-month vehicle loans in addition to their own financing alternatives. For a long-term auto loan, you might be able to get a fantastic offer. Single-brand shops often offer 0% vehicle finance, even on longer-term loans, which is a common practice in these stores. Don’t assume that the dealership is where you’ll get the best deal. Dealerships may also offer some of the highest interest rates to prospective purchasers.

When to Get an 84-Month Auto Loan

If you want to pay off the loan early and the lender does not charge a prepayment penalty, getting an 84-month vehicle loan can be a great decision. There are times when you are on a limited budget or don’t have much wiggle room when haggling with an auto dealer. A long-term auto loan can be your best bet if you don’t have many options.

If extending the term is the only way to make monthly payments within your means, then it might be the wisest choice. It can also be the best choice if you intend to pay back the loan early and there are no penalties, if it enables you to get a better, more dependable car, or if your warranty is lengthy enough to reduce the cost of repairs.

Final Thought

Auto loans with durations longer than 84 months are often too costly to suggest for borrowers with lower incomes. However, they can be helpful for people who can’t afford the cars they want without taking on extended loan terms. You can obtain a more accurate estimate of the monthly payments and total interest associated with various loan terms by using auto loan calculators.