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84-Month Auto Loan: What to Consider

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It used to be that the longest car loan you could get was for 60 months, or five years. But now the average new-car loan is nearly 70 months, with some lenders offering 84-month auto loans or longer.

That being said, you may only be able to get this kind of loan if you’re looking for a larger sum or you’re purchasing a new model.

During the COVID-19 pandemic, some automakers are offering 0% APR offers for as long as 84 months. You can see a current list of car deals here. But before you go, here’s what you should know about getting an 84-month auto loan, plus some alternatives if you’re looking to avoid that seven-year itch.

Benefits of an 84-month auto loan

Lower payments

The first thing you might notice is that an 84-month auto loan will have a much lower monthly payment than a short-term loan.

For example, a $20,000 loan for 84 months with a 5% APR would cost $283 monthly. This is $39 a month less than if you had the same terms with a 72-month loan — and $94 less than the same terms on a 60-month loan.

Loan TermMonthly Payment
60 months (5 years)$377
72 months (6 years)$322
84 months (7 years)$283

To most people, a payment of $283 looks a lot better than one for $377. (There are drawbacks to this, too, which we’ll address later.)

Nicer car

Because the payment would be lower on an 84-month auto loan, you may find that you could afford a more expensive car on your monthly budget than you thought.

The monthly payment on that $20,000 car in the scenario above would be $283. But if you could afford $377 monthly — which you’d pay with a 60-month term — you could instead get a car worth $26,700. You’d pay $377 a month for those 84 months. It’s important to have control over your finances, though, so you should skip the more expensive car if it’ll put you deep into debt.

Flexible monthly budget

With a smaller car payment, you could have more money monthly.

Here are some examples of how you could use that cash:

Drawbacks of an 84-month auto loan

Higher overall cost

While the lower monthly payment might seem great, it comes at a cost. You end up paying more to borrow money when you accept a longer term.

For example, the total interest you would pay on that $20,000 loan with an APR of 5% and term of 84 months is $3,745. Here’s the breakdown for the same loan over five or six years:

Loan TermMonthly PaymentTotal Interest
60 months (5 years)$377$2,645
72 months (6 years)$322$3,191
84 months (7 years)$283$3,745

The interest you would pay on the 60-month auto loan is $1,000+ less than the interest on the 84-month loan.

Negative equity

At the beginning of an 84-month auto loan — especially if you don’t give a down payment — your car is probably worth more than what you’re paying monthly for it. And at the end of the loan, your car is probably worth less than what you’re paying for it.

Lack of long-term flexibility

A lot can change in seven years. Will your car still be the type of vehicle you need? For example, will it be big enough for your growing family or be able to handle different weather if you move?

How to tackle an 84-month auto loan

If you already have a seven-year auto loan and want to find ways to pay early or get out of it, here are some ideas:

  • Pay to principal monthly: Check with the lender to see if you’d be penalized for paying off the loan early. If not, pay extra each month, putting the extra money “to the principal.” When you pay to the principal, you’re paying off the original amount of what you owe.
  • Pay to principal in a lump sum: If you won’t be penalized for paying off the loan early and don’t want to make an extra payment each month, you can make one large lump-sum payment to the principal.
  • Refinance: You may be able to refinance and get a lower APR and/or a shorter term that makes it easier to pay off your loan faster — and for less. If this sounds like a good option, you could go to LendingTree and fill out an online form. You may be matched with up to five different loan offers from lenders based on your creditworthiness.

Alternatives to an 84-month auto loan

Lease a car

A car lease typically provides lower payments than a financed car purchase. It can be a smart choice on a monthly budget, and it could make sense in the long term for people who would otherwise buy a new car every few years. However, it is similar to renting an apartment rather than buying a condo since you don’t build equity. There can also be fees for things like excess mileage and wear on the car. You can find out whether leasing or buying a car is right for you.

Buy a less expensive car

A less expensive new car or an older used car in the model you want may allow you to have a low monthly payment and a shorter loan term so that your monthly budget is in good shape and the amount you pay for the loan is lower. You can search for tips on how to negotiate a car price.

Make a higher down payment

Dipping into your savings or waiting until you have saved enough to make a significant down payment can seriously help by lowering your payment and APR and shortening your term. But beware to not dip too far into your savings that you can’t pay other bills on time.

Get a cosigner

If a high APR is driving up your monthly payment and you’re considering an 84-month auto loan to get a lower payment, consider a cosigner. A cosigner is a person who signs on the auto loan with you. They are personally and jointly responsible for paying back the loan. Because of this, being a cosigner is a big deal. If you don’t pay back the loan, they must — or their credit can be severely affected, too.

That being said, they are backing you up and saying you will be responsible, which could lead to a lower APR — and the monthly payment — on an auto loan.

The bottom line

Be sure to always look at overall costs rather than just monthly ones. While you may be saving more in the short term, your loan may be more costly in the long run.

An 84-month auto loan is probably not a good idea for most people as it could be easy to get deep into debt without realizing it.

It’s important to do research and know your options. Never settle on the first lender that offers a loan — especially when you could be paying it for the next seven years.


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