As the situation going on almost every automaker is offering 84 months loan. But is it worth having a loan for a car for 7 years? Think about it they are giving a lot of time but are it worth? What will be your future expectations from the car? Let’s see what are the pros and cons and then decide whether you want it or not and check the alternatives that you can have.
Pros of 84 months loan:-
Lower monthly payments
As compared to three or four years car loan the seven years loan has lower monthly payments that can help you save that remaining money or if you have low income this may work best for you.
For example, a $20,000 car loan can go from $377 to $283 if you opt for seven years loan instead of five years.
Almost every automaker is offering 0% interest on loans that’s a bonus for you. Now you don’t have to worry about the interest money. It’s like you are borrowing money for free. Not all customers will qualify for this type of loan only a few who has excellent credit score will qualify.
With the more loan period, you can easily opt for a car whose payment doesn’t fit in three or four years loan but it will fit in seven years.
For example, the $ 20,000 car will be having $283 monthly payment for 84 months but if you can afford $377 then you can get a car worth $26,700.
Cons of 84 months loan:-
Higher overall costs
Upgrading your loan from 60 months to 84 months end up paying interest for two more years. The overall interest can go higher than the cost of your car. Before having it calculate how much you have to pay and look for all factors.
Seven years is a long period as with time our needs changes. Think about is this car will be enough for you even after years? The warranties and guarantee all will expired in this long time then your maintenance will be high.
The car depreciates 20% in the starting years of it and with the time it gets to continue to depreciate. There are chances that you will be paying more than the worth of your car after years.
Alternatives for 84 months loan
Lease a car
Leasing a car is a good alternative; in this, you can have a car of your choice and you will not be paying more than buying it. Just confirm the rules of leasing before taking the deal and we recommend you to carefully read the contract before signing it.
Buy a less expensive car
If you are choosing 84 months loan only because your car is expensive then we will suggest you have a less expensive car that resides in your budget that will be beneficial for you.
Make a higher down payment
Giving a higher down payment helps you by lowering monthly payments and APR. You can use your savings to do it but use only if you have enough and still left enough for paying bills and other expenses.
Get a co-signer
If you are opting 84 months loan so that your APR get reduced instead of that think of co-signer. Co-signer is a person who is equally responsible for paying back the loan you are borrowing. Think about it wisely; if you are not able to pay it will affect both of your credit scores.