August 3, 2017 in Auto Loans

Should you ever consider an 84-month car loan?

The terms of car loans are getting longer, and today there’s nothing shocking about an 84-month auto loan, which stretches payments out over seven years. In 2014, 62 percent of all car loans were for terms longer than 60 months, and nearly 23 percent were for 73- to 84-month terms.

Compare these figures to when auto industry titan Lee Iacocca was a regional manager for Ford in the 1950s. Industry lore has it that he became a star by inventing an unheard-of sales pitch: Car buyers could purchase a 1956 Ford for 20 percent down and $56 a month. Loans were paid in full in 36 months.

How times have changed. Now, car loans of at least five years are not uncommon, and while long terms have advantages for certain buyers, they are not free of some big disadvantages.

How car loan term affects cost
Loan amount Rate Length of loan Total amount paid at end of loan
$35,000 5% 60 months $39,630
$35,000 5% 84 months $41,554

 

Benefits of 84-month auto loans

Downside of 84-month loans

Use Bankrate’s auto loan calculator to figure out the monthly payments on your next new or used car.