Understanding 84-Month Auto Loan Rates: What You Need to Know

When it comes to financing a new car, choosing the right auto loan can make a significant difference in your overall cost. One option that has gained popularity is the 84-month auto loan. These extended-term loans allow borrowers to spread out their payments over a longer period, potentially reducing their monthly payments. However, they come with their own set of considerations, including higher interest rates and a longer repayment term. In this comprehensive guide, we'll explore everything you need to know about 84-month auto loans, including how they work, their pros and cons, current interest rates, and tips for securing the best deal.

What is an 84-Month Auto Loan?

An 84-month auto loan is a car loan with a repayment term of 84 months, or 7 years. This extended term allows borrowers to lower their monthly payments compared to shorter-term loans. For example, if you were to finance a $30,000 car with a 60-month (5-year) loan at a 4% interest rate, your monthly payment would be around $552. With an 84-month loan at the same interest rate, your monthly payment would drop to approximately $432.

How Does an 84-Month Auto Loan Work?

The basic principle behind an 84-month auto loan is that you are borrowing money to purchase a vehicle and agree to repay the loan amount plus interest over 84 months. The longer term spreads out your payments, making them more manageable on a monthly basis. However, you should be aware that while your monthly payment is lower, the total amount of interest paid over the life of the loan is typically higher compared to shorter-term loans.

Pros of an 84-Month Auto Loan

1. Lower Monthly Payments: The primary benefit of an 84-month auto loan is the reduced monthly payment. This can make it easier to fit a car loan into your budget and allow you to afford a more expensive vehicle or higher trim level.

2. Improved Cash Flow: With lower monthly payments, you have more disposable income available each month. This can help with managing other expenses or saving for future needs.

3. Affordability: Extended-term loans can make purchasing a new car more affordable for some buyers who may not have the budget for higher monthly payments associated with shorter-term loans.

Cons of an 84-Month Auto Loan

1. Higher Interest Rates: Lenders often charge higher interest rates for longer-term loans. This means you could end up paying more in interest over the life of the loan, despite the lower monthly payment.

2. Increased Total Cost: Due to the extended term, you will pay more in total interest, making the overall cost of the car higher. This can be a significant factor if you plan to keep the car for a long time.

3. Depreciation: Cars depreciate in value over time. By the time you finish paying off an 84-month loan, your car may have significantly depreciated, which could affect your financial situation if you need to sell or trade it in.

4. Loan Balance vs. Car Value: With a longer loan term, you might find yourself "underwater" on the loan—owing more on the car than it is worth. This can be problematic if you need to sell the car before the loan is paid off.

Current 84-Month Auto Loan Rates

Interest rates for 84-month auto loans can vary based on several factors, including your credit score, the lender, and the current economic conditions. As of recent data, interest rates for 84-month auto loans typically range from 5% to 8%, though this can fluctuate.

Here’s a general overview of how rates might compare:

Credit Score Range	Average Interest Rate (84-Month Loan)
Excellent (750+)	5.00% - 6.00%
Good (700-749)	6.00% - 7.00%
Fair (650-699)	7.00% - 8.00%
Poor (Below 650)	8.00% - 10.00%

Tips for Securing the Best 84-Month Auto Loan

1. Check Your Credit Score: Your credit score plays a crucial role in determining the interest rate you’ll be offered. Obtain a copy of your credit report and check your score before applying for a loan. If your score is lower than you’d like, consider improving it before applying.

2. Compare Lenders: Different lenders offer varying rates and terms. Shop around and compare offers from banks, credit unions, and online lenders to find the best rate for your situation.

3. Consider the Total Cost: While a lower monthly payment may be appealing, consider the total amount you’ll pay over the life of the loan. Use online loan calculators to estimate the total cost based on different interest rates and terms.

4. Negotiate: Don’t hesitate to negotiate the terms of your loan with the lender. You might be able to secure a better rate or more favorable terms by asking.

5. Evaluate Your Budget: Ensure that the lower monthly payment of an 84-month loan fits within your budget and that you are comfortable with the total interest paid over the life of the loan.

Conclusion

An 84-month auto loan can be a viable option for those looking to lower their monthly payments and manage their budget more effectively. However, it’s important to carefully consider the trade-offs, including higher interest rates and the increased total cost of the loan. By understanding the benefits and drawbacks, and by following the tips for securing the best loan, you can make an informed decision that aligns with your financial goals.