Long term auto loans (over 84 months)

desii72

Hi,

I would first like to say I have read and understand all the negative aspects of getting a long term auto loan but in our currently situation it meets our needs.

I am able to do an auto loan for up to 84 months through my credit union but have read and seen loans longer than 84 months. Some of the longer ones are only being offered by credit unions which I do not qualify to be a member of. The dealership I emailed said the max loans their banks offer is 72 months.

How is one able to obtain a loan for 96 or even 120 months that is not tied exclusively to a credit union?

kyfdx

I haven't seen loans longer than 84 months for any item that depreciates in value.
Most vehicles have lost over 85% of their original value after 7 years. Any bank that would loan money for longer than that is going to make up for the risk by jacking up the interest rate.

If you have to finance for longer than 84 months to make the payments, then it's likely you are trying to buy a car that doesn't meet your budget. I'd suggest shopping cheaper models.

desii72

Thank you for the fast response. It is true at the moment we are trying to keep the payments within budget and get rid of an older car that has no equity and might break down soon. The plan is the keep the payments low while my wife is finishing up school and once she graduates in 2 years, refinance it or just put a lot more towards principle and pay it off within the average 5 year term.

We want to refrain from used cars because of issues we've had in the past on reliability and such.

kyfdx

desii72 said:

Thank you for the fast response. It is true at the moment we are trying to keep the payments within budget and get rid of an older car that has no equity and might break down soon. The plan is the keep the payments low while my wife is finishing up school and once she graduates in 2 years, refinance it or just put a lot more towards principle and pay it off within the average 5 year term.

We want to refrain from used cars because of issues we've had in the past on reliability and such.

The problem with overextending payment terms, in anticipation of better finances later, is that life can get in the way. Sometimes, things don't turn out the way you plan. All of that factors into why banks don't think longer term auto loans are worth the risk.

Dealers are motivated to sell cars in any way possible. If they don't have a lender that can meet your needs, that should tell you that what you want to do, might not be a good idea.

Put your extra money into maintenance and care on your current car. You only need two years, right?
The alternative is to lease a very cheap vehicle to get you through the next three years, then get what you can afford, after that.

Otherwise, you'll be the person coming back in three years.. wanting to trade out of a car that's worth $10K, but you still owe $18K on....

desii72

Very true,

Thank you!

isellhondas

Our Moderator gave you great advice. Years ago, most car loans were for 24 months. That number keeps creeping up. I remember when I was a kid, some friend sof my parents bought a new T-Bird and financed it for a whopping (at the time) 48 months! Now, it seems the norm is 60 months. Granted, cars last longer than they used to but anything over that is just too long at least in my opinion. In your case, a three year lease might make a lot of sense. Lease something like a Honda Civic or Toyota Corolla that has a high residual. You'll be under
warranty for the whole 3 years and you will be in a different position in life.

Mr_Shiftright

The difference in monthly payment between a 60 month loan and an 84 month loan on a $25,000 car is only $115 a month and you will pay almost $1,000 more just in interest for the benefit of those extra 24 months.

It's a meager short term relief for a long term headache IMO.

Quite honesty, if $115 extra month is going to make you or break you, you are already on thin ice budget-wise and maybe a few years old used car is a better way to go. A $15,000 car financed for 60 months, and with your old car as a down, would get your payments under $250 a month. And that used car might have warranty left.