Is It Bad to Finance a Car for 84 Months?
Introduction
Financing a car for 84 months, also known as an 84-month auto loan, is an increasingly common option for car buyers. This type of loan extends the loan term to seven years, potentially lowering monthly payments but also increasing the overall cost of the loan. In this article, we’ll explore the pros and cons of 84-month car financing to help you make an informed decision.
Advantages of Financing a Car for 84 Months
- Lower monthly payments: By extending the loan term, you spread out the cost of the car over a longer period, resulting in lower monthly payments.
- Qualifying for a better car: Lower monthly payments can make it possible to qualify for a more expensive or better-equipped car that you might not otherwise be able to afford.
Disadvantages of Financing a Car for 84 Months
- Higher total cost: While monthly payments may be lower, you’ll end up paying more interest over the life of the loan. This is because you’re paying interest on the loan for a longer period.
- Longer commitment: Financing a car for 84 months means you’re committed to the loan for seven years. This can be a long time, especially if your financial situation changes.
- Negative equity risk: If the value of your car depreciates faster than you’re paying off the loan, you could end up owing more than the car is worth. This is known as negative equity.
Tips for Making an Informed Decision
- Consider your budget: Make sure you can comfortably afford the monthly payments, including insurance, gas, and maintenance costs.
- Compare loan terms: Explore different loan terms, such as 60 months, 72 months, and 84 months, to see how they impact monthly payments and the total cost of the loan.
- Factor in the car’s value: Research the depreciation rate of the car you’re interested in to estimate its value over the loan term.
- Get pre-approved for financing: This will give you a better idea of the loan terms and interest rates you qualify for.
- Shop around for the best deal: Compare offers from multiple lenders to find the best combination of interest rate and loan terms.
Conclusion
Whether or not financing a car for 84 months is right for you depends on your individual circumstances and financial goals. By carefully considering the advantages and disadvantages and following the tips above, you can make an informed decision that meets your specific needs.
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