Would you take out an 84-month car loan?

[amastewa93]

I recently took out a loan on a car myself (and have no regrets about it, I love the car)... Determining the loan term was difficult for me though. How long did I [I]really[I] want to pay on a car?

Now they are starting 84 month terms....

What do you think about that? Would you take out an 84 month auto loan?

[Jluke]

I couldn't handle 84 months of car payments, mentally. even if it were 0% financing.

no thanks.

[corn18]

I had an 84 month loan for a while. And a 72 month. And a 60 month. Upside down on all of them. That's when I checked in to this place and got some therapy. Now I pay cash. Funny thing is, now that we have to pay cash, we want to keep our cars a lot longer.

[disneysteve]

Here's my take. You shouldn't base how much you can afford to spend on the car on how much the monthly payments will be, so in that sense the loan term is irrelevant. You should determine what you can afford (using the 10%/36-month rule) and then take the loan that offers the best terms.

On both of our current cars, we took 72-month loans but I paid off my car in 12 months and we paid off my wife's car in right around 36 months (I don't remember exactly). But at the time of purchase, there was no advantage to a shorter term so we took the longer term knowing full well that we'd pay the cars off way before that.

[creditcardfree]

Absolutely not. I would never take out more than a four year loan. If I can't pay off a car in that time, I'm buying far too much car.

[disneysteve]

Absolutely not. I would never take out more than a four year loan. If I can't pay off a car in that time, I'm buying far too much car.

But what if you can get a lower rate on a longer loan? You take that but still pay it off in 3 or 4 years.

[james.hendrickson]

But what if you can get a lower rate on a longer loan? You take that but still pay it off in 3 or 4 years.

DS - thats exactly it. I think part of whats going on with lengthening terms is that, in part, people have stopped caring about how much they're paying in the overall. Instead, they are just focusing on monthly payments.

[Jluke]

out of curiosity I looked up auto loan rates at my credit union...

new/used

0-36 months is 2.24%
37-60 months is 3.24%
61-84 months is 3.74%

and.... drumroll please..

85-120 months is 8.49%

[disneysteve]

DS - thats exactly it. I think part of whats going on with lengthening terms is that, in part, people have stopped caring about how much they're paying in the overall. Instead, they are just focusing on monthly payments.

Oh people stopped caring a long time ago. That’s why most car places don’t even advertise prices anymore. They only advertise monthly payments, and frequently those are lease payments, not even purchase payments.

[disneysteve]

When I got my car the rate was the same regardless of the term so they just automatically wrote it up for 72 months. I questioned it and they said the term didn’t change the rate.

[james.hendrickson]

Oh people stopped caring a long time ago. That’s why most car places don’t even advertise prices anymore. They only advertise monthly payments, and frequently those are lease payments, not even purchase payments.

This blows my mind - cars are deprecating assets and borrowing for deprecating asset is generally bad advice. Not even knowing how much you're borrowing is even worse.

[msomnipotent]

If I can earn more with the cash sitting in a savings account, I would take out the longest loan. I set up all my bills to be paid automatically, so I wouldn't even see the car payment. Out of sight, out of mind.

I looked up 72 and 84 month loans just for giggles since we are researching what our next vehicle will be. All the places I looked at only gave those loans for vehicles over $50,000. I think the lowest rate I saw was 4.9%, so that rules that out for me.

[amastewa93]

I couldn't handle 84 months of car payments, mentally. even if it were 0% financing.

no thanks.

LOL - that is what I was thinking. Paying on a car is EXHAUSTING. Who wants to do it that long? That was nearly the term on my student loan payments haha.

[amastewa93]

I had an 84 month loan for a while. And a 72 month. And a 60 month. Upside down on all of them. That's when I checked in to this place and got some therapy. Now I pay cash. Funny thing is, now that we have to pay cash, we want to keep our cars a lot longer.

I am one of those people who will drive my car until the day it dies... I take it in for all the maintenance, etc. This is my first car loan I've ever taken out.

Prior to this, I bought $1K cars. One lasted me 4 years and the other just over a year. Then I walked, biked, and took the bus for a year and a half saving for a down payment on the car I really wanted. It is a 72 month term, but I am aiming to pay it off early and have already thrown a good chunk at it. In a year or two when it is paid off, I'll keep it until it dies probably LOL.

[creditcardfree]

But what if you can get a lower rate on a longer loan? You take that but still pay it off in 3 or 4 years.

Are there actually car loans like this? It seems the risk to the lender is higher the longer they loan the money thus they would want to be compensated with a higher rate.

I might take a longer loan. But most American's don't understand simple interest and don't pay off early. If they did they wouldn't be putting financing the smallest things on credit cards.

I also hope not to finance our next vehicles. We have two that are currently 11 years old. One has 130K miles, the other just over 100K. I also hate payments.