Is 7 years too long to finance a car? (2024)

Is 7 years too long to finance a car?

An 84-month auto loan can mean lower monthly payments than you'd get with a shorter-term loan. But having as long as seven years to pay off your car isn't necessarily a good idea. You can find a number of lenders that offer auto loans over an 84-month period — and some for even longer.

Is it bad to finance a car for 7 years?

Lenders usually charge higher interest rates for long-term auto loans. Because there's more time for a borrower to default on the loan, lenders consider longer-term loans to be a higher risk. To compensate for that risk, they often charge a higher interest rate when you stretch out the loan term.

How long is too long to finance a car?

You can finance your car for as little as a few months to more than 84 months—or seven years. The most common length is 72 months—or six years—followed by 84 months. The longer your loan term, the lower your monthly payments, but the higher the overall interest.

What are the benefits of a 7 year car loan?

What are the biggest disadvantages of financing a car for 5 years instead of 3 years?

Not all cars lose value at the same rate, but, on average, new cars lose 40 percent of their value after five years. If you decide to trade in your vehicle or sell it, you may find yourself upside down on your loan, owing more than what it's worth.

Is 6 years too long to finance a car?

Generally speaking, the longer you finance, the more interest you will have to pay. Many experts recommend a five-year loan or less if you can make it work. While a longer term might get you a lower monthly payment, your cost to own the vehicle will likely be higher based on interest paid over a longer length of time.

How to pay off a 7 year car loan in 3 years?

Why might someone get an 8 year auto loan?

This car loan length might allow you to get a vehicle with a higher-than-average loan amount, but by dividing the payment over eight years, you pay less per month than you would for a shorter loan at the same interest rate.

Is 72-month car loan bad?

Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go. You can learn more about car loans here.

What are the disadvantages of a large down payment on a car?

What are the disadvantages of a large down payment? Providing more money down doesn't guarantee a lower interest rate, and it can cut into your savings.

Should I get a loan for 7 years?

A longer loan term means you'll get a lower monthly payment, but you'll also pay more in interest. A shorter loan term is better, as it helps minimize borrowing costs and the risk of being upside-down on your loan.

How to pay off a 7 year car loan early?

The best way to pay off a car loan involves extra payments, signing up for autopay, and refinancing to a loan with a lower interest rate. But before you pay off your debt, make sure you consider the drawbacks of paying off the loan early. Check your loan agreement carefully to see what fees may apply. Experian.

What is the best amount of years to finance a car?

NerdWallet typically recommends keeping auto loans to no more than 60 months for new cars and 36 months for used cars — although that can be a challenge for some people in today's market with high car prices. Ultimately, choosing the best auto loan term depends on balancing cost, affordability and your specific needs.

When should you not finance a car?

What is considered a high car payment?

According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.

Do rich people finance expensive cars?

Overall, only 8.5% of these high rollers paid cash. Around 31% leased and 60.4% took out a loan with an average payment of $2,201 and an average term of 56 months. For comparison, the general market in 2021 saw 9% of buyers paying cash, 20% leasing, and 70% taking out a loan.

What is a good interest rate on a 72-month car loan?

An interest rate under 5% is a great rate for a 72-month auto loan. However, the best loan offers are only available to borrowers who have the best credit scores and payment histories.

How much is a 30 000 car loan?

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A $30,000 auto loan balance with an average interest rate of 5.0% paid over a 6 year term will have a monthly payment of $483. In total, the loan will cost $34,787 with $4,787 in interest.

Can you pay off a 72-month car loan early?

Can you pay off a 72-month car loan early? Yes, you can pay off a 72- or 84-month auto loan early. Since these are long repayment terms, you could save considerable money by covering the interest related to a shorter period of time.

What happens if I pay an extra $100 a month on my car loan?

Your car payment won't go down if you pay extra, but you'll pay the loan off faster. Paying extra can also save you money on interest depending on how soon you pay the loan off and how high your interest rate is.

How to pay off a 7 year car loan in 5 years?

What are the disadvantages of paying off a car loan early?

When you pay off your car loan early, your debt will become smaller. This is positive for your credit history but might lower your credit score slightly because you're no longer logging on-time monthly loan payments. Once you pay off the loan, you will no longer have positive payment history for that long-term loan.

Is it smart to get a 7 year car loan?

An 84-month auto loan can mean lower monthly payments than you'd get with a shorter-term loan. But having as long as seven years to pay off your car isn't necessarily a good idea. You can find a number of lenders that offer auto loans over an 84-month period — and some for even longer.

How much is a $40,000 car loan payment 84 months?

For example, a car buyer considering a $40,000 new car loan with an 84-month term at 9% APR would have a monthly car payment of about $623 and pay $12,369 in interest over the seven-year loan.

Is 84 months too long to finance a car?

In most cases, getting an 84-month car loan isn't the best option. While a long-term loan can keep your monthly payments low, these loans are often more expensive over time due to interest fees.