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Auto Loan Length??

firemartinez1980
Regular Contributor

Auto Loan Length??

This may be a dumb question, but can anyone finance for 84 months or is the typical just 72 months?

 

I ask because I finally have my credit up and my debt paid after many years of hard work. I went to the dealership the other day and test drove a truck I am interested in. They ran some numbers and payment options based on a 700 credit score and one of the terms was for 84 months.

 

I didn't ask when I was there because who ever knows if a dealer is telling the truth....My current scores are all around 680 FICO

 

I know over the long haul more interest is paid in longer terms, but If I sell the vehicle in 4-5 years or trade it in then it really doesn't matter as long as the monthly payments are lower....right?

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10 REPLIES 10
Gladius
Frequent Contributor

Re: Auto Loan Length??


@firemartinez1980 wrote:

This may be a dumb question, but can anyone finance for 84 months or is the typical just 72 months?

 

I ask because I finally have my credit up and my debt paid after many years of hard work. I went to the dealership the other day and test drove a truck I am interested in. They ran some numbers and payment options based on a 700 credit score and one of the terms was for 84 months.

 

I didn't ask when I was there because who ever knows if a dealer is telling the truth....My current scores are all around 680 FICO

 

I know over the long haul more interest is paid in longer terms, but If I sell the vehicle in 4-5 years or trade it in then it really doesn't matter as long as the monthly payments are lower....right?


Depends on the bank.  Many banks are giving the option of 84 months whereas 1-2 years ago, it was very limited (mostly limited to higher priced brands such as BMW, Mercedes, etc.).  I don't know if COVID has anything to do with it or what.  Many frown down on 84 month terms or even 72 month terms.  I guess it comes down to the re-sale value of the car and how well it holds it's value.  Like say for example, Jeep Wranglers hold their value very well and if you have a 72 month or even 84 month term, if you keep up the maintenance on one, after 2-3 years, you will "at least" get what you owe on it.  That also depends on the interest rate of course.  72 and 84 month terms usually have the higher end of the interest rates (even though the monthly payments are on the lower end).  Even if you have excellent credit.

Message 2 of 11
barca
Regular Contributor

Re: Auto Loan Length??

Be careful.

if this is a brand new truck

 

if you intend to sell/trade in 4 to 5 years from now, you might have negative equity. (becuase of your 84 month loan)

i.e. you might owe more than the car is worth.

 

A good option if you intend to trade in your truck early is to lease.

When you lease, you still have the option to buy at the end of the lease.

 

Remember in general - new cars depreciate heavily in the first few years.

 

if money is tight and you really like the truck - consider a fairly used one maybe a couple of years old.

 

The above is just my opinion.

 

 

 

 

 

Message 3 of 11
4sallypat
Frequent Contributor

Re: Auto Loan Length??

To see how "honest" the car dealer is, try Capital One Auto Navigator - they do a SP and will make an offer - total amount available to finance and approx APR.

 

Plug in the VIN into the Cap 1 system and see what they offer.  

 

Cap 1 you can't be overcharged (interest mark up) by the dealer so at least you will know if the dealer is ripping you off.

 

The dealer CAN go below Cap 1 but then that's up to the dealer to spin an offer to you.

 

As previously mentioned, avoid the 72 and 84 month loans as you will be negative equity during the loan period which is scary if the truck gets stolen or totalled as you will owe the bank on a truck you can't drive anymore.  Consider getting a GAP insurance to cover....

Message 4 of 11
sccredit
Valued Contributor

Re: Auto Loan Length??

Most banks now offer 84 month terms. Heck, the average car loan is now 67 months.

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Message 5 of 11
Mjhall85
Frequent Contributor

Re: Auto Loan Length??

Heck my friend who works at a dealer say they have done some recently for 96 months! That is absoloutely nuts. Pending on price of truck I would do 72 max.

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Message 6 of 11
4sallypat
Frequent Contributor

Re: Auto Loan Length??


@Mjhall85 wrote:

Heck my friend who works at a dealer say they have done some recently for 96 months! That is absoloutely nuts. Pending on price of truck I would do 72 max.


WOW!  Never heard of 96 months - I wonder what bank would do that and at what APR ?

 

Truck prices are crazy - I looked at getting the GMC AT4 truck pre-pandemic and they are just insane ($75K).

For that much money, I am getting a Land Rover Defender 110 that has better 4WD ability...

Message 7 of 11
njcobra10tha
Established Contributor

Re: Auto Loan Length??

In August I financed a new Lexus NX for my mom 84 months 4.25% interest.

This is likely going to be her last car and it seemed to make sense to us.

She previously leased but needed a co-signor because hse has very limited income. 

Lease rates were not good at all in August so I financed it for her.

Message 8 of 11
aj2121
Regular Contributor

Re: Auto Loan Length??

84 months is becoming increasingly common. As others mentioned 96 is starting to pop up from major banks. There are specialized auto lenders, typically for collector cars and exotics, that offer 120 month loans.

 

The interest jump from 72 to 84 often seems to be pretty significant, unless it is a subvented rate through the captive lender (GM Financial, Chrysler Capital, ETC). If you are looking for the lowest payment possible and you are set on buying new, leasing is certainly a viable option. Also, most banks that offer 72 month terms also offer 75 month terms with very minimal interest rate differences, not much of a term increase but can save a little money each month.

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Message 9 of 11
Shooting-For-800
Senior Contributor

Re: Auto Loan Length??

Fill out Cap One Navigation Auto Loan Prequal...it is a SP.

This will let you know if the rate is fair and may offer you a better rate.

84 months is usually a higher rate than 72 which is usually higher than 60....etc.

It may be worth it if the rates are similar.

It may be a real bad decision if the vehicle deprecates 

     fast or has a lot of issues or was a bad deal from the start.

Think it through and see what Cap One says.

DW was offered 2.45% and I was offered 3.10% within the last 2 weeks.

GL!

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