Understanding the Benefits and Drawbacks of an 84 Month Auto Loan

#### Introduction to 84 Month Auto LoanAn 84 month auto loan, or an extended-term auto loan, is a financing option that allows borrowers to pay for their ve……

#### Introduction to 84 Month Auto Loan

An 84 month auto loan, or an extended-term auto loan, is a financing option that allows borrowers to pay for their vehicle over a longer period, specifically 7 years. This type of loan has gained popularity among car buyers who want lower monthly payments and the flexibility to manage their budgets more effectively.

#### Advantages of an 84 Month Auto Loan

One of the primary benefits of an 84 month auto loan is the significantly lower monthly payments. By spreading the cost of the vehicle over a longer period, buyers can afford more expensive cars without stretching their finances too thin. This can be particularly advantageous for those with tight budgets or who are purchasing a vehicle for the first time.

Another advantage is that it can improve cash flow. With lower monthly payments, borrowers can allocate funds to other essential expenses, such as housing, education, or savings. This flexibility can be crucial for families or individuals who need to balance multiple financial obligations.

Additionally, an 84 month auto loan may make it easier for buyers to qualify for financing. Lenders often have more lenient approval criteria for longer-term loans, which can help those with less-than-perfect credit secure a vehicle.

#### Disadvantages of an 84 Month Auto Loan

However, there are also significant drawbacks to consider. One of the main concerns is the total interest paid over the life of the loan. While monthly payments are lower, the extended loan term means borrowers may end up paying more in interest compared to shorter-term loans. This can make the vehicle more expensive in the long run.

Moreover, depreciation is a critical factor to keep in mind. Cars typically lose value quickly, and with an 84 month auto loan, borrowers may find themselves owing more than the car is worth for a longer period. This situation, known as being "upside down" on a loan, can be problematic if the borrower needs to sell or trade in the vehicle before the loan is paid off.

#### Is an 84 Month Auto Loan Right for You?

Deciding whether an 84 month auto loan is the right choice depends on individual financial circumstances and goals. For those who prioritize lower monthly payments and have a stable income, it can be a suitable option. However, it's essential to carefully consider the long-term costs and the risk of depreciation.

Before committing to an 84 month auto loan, potential borrowers should evaluate their budget, credit score, and the total cost of the loan. It may also be beneficial to compare offers from different lenders to find the best interest rates and terms.

#### Conclusion

In conclusion, an 84 month auto loan can provide financial flexibility and make car ownership more accessible for many buyers. However, it is crucial to weigh the advantages against the potential drawbacks, including higher overall costs and the risk of negative equity. By conducting thorough research and understanding personal financial situations, borrowers can make informed decisions that align with their long-term goals.