If you’re getting a used car, you likely won’t have a warranty to worry about. Try to avoid an auto loan term that exceeds the length of your car’s warranty. With an 84-month loan, you’ll still be paying off your car long after the warranty ends. There are some new cars that offer long warranties, but most are three years or 36,000 miles. If you have a tight budget and low emergency reserves, it could put a big strain on your budget. With an 84-month term, there’s a much higher chance that you’ll need to shell out for repairs while you still have a monthly payment. The older the car, the more costly the repairs are. This means if you want to sell the vehicle or it gets totaled, you’ll need to pay the difference out of pocket. With a lower monthly payment, you have an increased risk of owing more than your car is worth. You’ll lose 20 percent - or more - in the first year and 60 percent by the fifth year. On average, a new car can lose more than 10 percent of its value within the first month after you drive it off the lot, according to Carfax. And that’s if the option is offered at all. Not only that, 84-month car loan rates tend to be higher because longer terms are riskier for lenders. It may not be enough to be a deal breaker when faced with a more affordable payment every month, but it’s money that could be spent elsewhere. No matter how much or how little you finance, you’re going to pay more in interest with a longer loan. While your monthly payments will be lower with a longer term, the total interest charged will be higher. Here are some potential pitfalls to watch out for: More expensive Reasons to avoid 84-month auto loansĪlthough a longer auto loan term means a lower monthly payment, it could be trouble later on. Since there’s more time for interest to stack up, an 84-month term is naturally more expensive: You’ll wind up paying $2,571 - nearly $750 more. Extend that term to 84 months, though, and your monthly payment would drop to $269.īut that 60-month term would only cost you $1,825 in interest. If you were to opt for a 60-month repayment term, your monthly payment would be $364. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.įor example, consider a $20,000 auto loan with a 3.49 percent interest rate. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.ī is an independent, advertising-supported publisher and comparison service. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.īankrate follows a strict editorial policy, so you can trust that our content is honest and accurate.
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