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An 84 month auto loan is just like any other auto loan and is only for 7 years, usually comes with the highest interest rates and lower payments.
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With low monthly payments, an 84-month auto loan may seem like a good idea on paper. But those lower car payments come at a real financing cost: interest. And while you’ll almost certainly pay more overall than you would with a shorter-term loan, there are some situations in which an 84-month auto loan might make sense.
We on the Guides Auto team looked at the pros and cons of these longer loan terms and whether the numbers can add up to a good financial decision. This guide will help you understand how these loans work and where you might be able to find the best auto loan rates and the best auto refinance rates with 84-month terms.
The Guide team is committed to providing reliable information to help you make the best possible decision about financing your vehicle. Because consumers trust us to provide objective and accurate information, we’ve created a comprehensive rating system to compile our rankings of the best auto loan companies. We’ve collected data on dozens of loan providers to grade companies on a wide range of ranking factors. After 300 hours of research, the end result was an overall rating for each provider, with companies scoring the highest on the list.
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An 84-month auto loan gives you seven years to repay the lender. Although shorter term lengths are more ideal, the most common term length in the American auto market is 72 months, according to Edmonds.
As car prices continue to rise, 84-month auto loans are becoming more popular. Spreading your car payments over a longer period of time can lower your monthly obligation – often significantly. The downside is that with those lower monthly payments comes more time for interest to accrue, along with more potential risk.
Auto loans lasting up to 84 months are more common than ever. However, they are still not as common among lenders as 24- to 72-month terms. You have a few options for an 84-month auto loan.
Traditional banks are often the first stop when borrowers are shopping for a car loan. With many major banks now offering 84-month financing, it may be worth checking if yours is one of them.
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Some banks will offer you a discount on your auto loan rate if you have a checking account, savings account, credit card or other financial account. Even if your bank doesn’t, the convenience of having all your banking in one place is worth considering.
Credit unions offer many of the same advantages as commercial banks, but as member-based organizations. While credit unions may offer low rates and few fees, they require membership based on specific criteria to access their loan products.
Membership requirements for credit unions range from working for a specific employer to donating to an approved charitable organization to paying membership fees. Many operate nationwide and offer 84-month auto loans as part of their portfolio.
You can also go the digital route for an 84-month loan. As more people shop for cars on the Internet, online lenders are becoming a more popular source of financing. You will find many options that offer longer loan terms.
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And just because online lenders don’t have physical branches doesn’t mean they aren’t reputable providers. Many are backed by established banks, and some are even the online lending face of a major bank.
In a lending marketplace, instead of applying with individual lenders, you enter your information into a portal and wait for loan offers.
Apart from cutting down on legwork, this option lets you compare loan offers at one place. However, if you use one of these marketplaces, do your research carefully. While you will get offers from established lenders, you can also get offers from less reputable ones.
Most car dealers offer their own financing options, and many offer 84-month vehicle loans. You may be able to find a great deal on a long-term auto loan. Dealerships – especially single-brand dealerships – sometimes offer 0% auto financing, even on long-term loans.
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Don’t just assume you’ll get your best deal at the dealership. Car buyers can also find the highest interest rates at dealerships.
Current auto loan interest rates can average anywhere from 5.18% to 21.32%. Rates for 84-month auto loans are generally on the higher side and vary widely depending on the lender you choose and other factors.
Although term length is a factor in the overall cost of your loan, it is not the only one. Credit score is the primary factor used to determine rates based on whether the vehicle is new or used, and your overall credit history. According to data from Experian, the graph below shows the average interest rates for new and used car loans based on various credit scores.
Below you can compare rates and terms for 84-month auto loans and shorter terms. While using this auto loan calculator, you can also get offers for your estimated monthly payment.
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* The calculators used on this website are being provided for educational purposes only. Data will not be collected or stored. The results are estimates based on the information you provide and may not reflect the actual cost of your quote.
There are many reasons why an 84-month auto loan may not be your best option. Here are some of them:
Signing up for an 84-month auto loan comes with serious drawbacks. Here are some things you should keep in mind before getting one.
The most obvious downside to an 84-month auto loan is that you’ll pay more in interest over the life of the loan. Longer loan terms have the highest interest rates, but they can also increase the total interest you pay in other ways.
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Because you’ll pay less each month, you’ll also pay less toward your loan principal — the actual amount you borrowed. As a result, you will pay more in interest over the long term for your loan origination.
The table below shows how different loan terms affect the total amount of interest that would be paid on a $25,000 loan with an interest rate of 5.2%.
Borrowing more on your vehicle than it’s worth is known as a reverse on your auto loan. This situation of negative equity, also known as being underwater, is a dangerous place to be financially. This puts you at risk of making loan payments on a car you no longer own if it is totaled.
How much time you spend on the upside depends on how much you put down on a vehicle, the term of your loan and how quickly your vehicle depreciates. Taking out an 84-month auto loan can leave you underwater for years.
Average Car Loan Interest Rates By Credit Score (september 2023)
Once you pay off the car loan, the remaining equity in your vehicle is a financial asset. However, the older your vehicle is and the more miles it has, the more it depreciates.
With an 84-month loan, you’ll pay for your car over seven years. Even if you buy a brand new vehicle, by the time you finish paying it off, your car will be more than seven years old. While it will still have some value, it will be significantly less than when the car was new.
Despite its many drawbacks, an 84-month auto loan can be a good option for you in certain situations, such as:
Despite the drawbacks, the 84-month car loan has some advantages. Depending on your situation, a longer loan tenure may work in your favor.
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The main advantage of an 84-month loan is that you will have a lower monthly payment. Even if you can afford to pay more now, your financial situation can change overnight. By having a lower monthly payment you can avoid the risk of defaulting on your loan and losing your car.
Sometimes, getting an 84-month auto loan is a requirement. It is useful to remember this
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