When you’re considering financing a car, you’ll hear about loan terms in months. From shorter 36-month loans to longer 72-month options, it can be confusing to understand the actual time commitment. If you’re wondering “How Long Is 84 Months?”, the simple answer is 84 months is equal to 7 years.
In the world of auto loans, 84 months represents one of the longest standard loan terms available. Understanding what a 7-year car loan entails is crucial for making informed decisions about your car financing. Let’s delve into the details of 84-month car loans and what you should consider before committing to such a long repayment period.
Typical Car Loan Lengths Explained
Car loans come in various lengths, also known as terms. These terms dictate how long you’ll be making payments on your vehicle. Common car loan terms generally range from a shorter 36 months up to 84 months. While you might find options outside this range, these are the most frequently offered by lenders.
Common Car Loan Terms:
- 36 months (3 years)
- 48 months (4 years)
- 60 months (5 years)
- 72 months (6 years)
- 84 months (7 years)
As you can see, an 84-month car loan stretches your repayment over a significant 7-year period. Choosing a longer term like 84 months has distinct implications, both beneficial and detrimental, which we’ll explore further.
The Rise of the 84-Month Car Loan
While traditionally, shorter loan terms were favored, the average car loan length has been increasing. Currently, 72 months (6 years) is the most common car loan term for both new and used vehicles. However, the popularity of even longer terms like 84 months is on the rise.
This shift towards longer loan terms is primarily driven by the desire for lower monthly payments. As vehicle prices increase, stretching the loan over a longer period makes affording a car more accessible for many buyers. An 84-month loan reduces the monthly financial burden compared to a 60-month or 72-month loan, making it seem more attractive at first glance. However, this affordability comes at a cost.
Advantages of an 84-Month Car Loan
Opting for an 84-month car loan, or any longer-term loan, presents certain advantages that appeal to car buyers:
Lower Monthly Payments
This is the most significant and often the primary driver for choosing an 84-month loan. By spreading the total loan amount over 7 years, the amount you pay each month is reduced. This can make a significant difference in your monthly budget, allowing you to afford a more expensive car or free up cash flow for other expenses.
Easier Credit Building
For individuals looking to build or improve their credit score, an 84-month loan can be a tool. Consistent, on-time payments over a long period demonstrate responsible credit behavior and can positively impact your credit history. While there are other ways to build credit, a car loan offers a structured and relatively accessible path.
Opportunity to Afford a Better Vehicle
With reduced monthly payments, an 84-month loan can enable you to purchase a more desirable car than you could with a shorter term. This might mean upgrading to a larger vehicle, a model with more features, or simply a newer car that better meets your needs and preferences.
Disadvantages of an 84-Month Car Loan
Despite the appealing lower monthly payments, an 84-month car loan comes with considerable drawbacks that should not be overlooked:
Higher Total Interest Paid
The most significant disadvantage of an 84-month loan is the substantial amount of interest you’ll accrue over the 7-year period. Longer loan terms inherently mean more time for interest to accumulate, resulting in a significantly higher total cost for your vehicle compared to shorter-term loans. You could end up paying thousands of dollars more in interest over the life of an 84-month loan. Furthermore, longer loan terms often come with higher interest rates to begin with, exacerbating this issue.
Vehicle Depreciation
Cars are depreciating assets, meaning they lose value over time. With an 84-month loan, you’re highly likely to be “upside down” or “underwater” on your loan for a significant portion of the term. This means you owe more on the car than it’s actually worth in the market. If you need to sell or trade in your vehicle before the loan is paid off, you’ll have to cover the difference, potentially out-of-pocket. In case of an accident resulting in a total loss, your insurance payout might not cover the outstanding loan balance, leaving you with debt on a car you no longer possess.
Increased Risk of Default
Life circumstances can change unexpectedly over a 7-year period. Job loss, unexpected expenses, or changes in financial situations can make it challenging to keep up with loan payments. The longer the loan term, the greater the risk of defaulting. Defaulting on a car loan can severely damage your credit score and potentially lead to repossession of your vehicle, further compounding your financial difficulties.
Alternatives to 84-Month Loans: Considering Shorter Terms
While 84-month loans offer lower monthly payments, the long-term financial implications are substantial. Exploring shorter loan terms, even if it means slightly higher monthly payments, can be a much more financially sound decision in the long run.
Shorter-term loans (36, 48, or 60 months) offer several benefits:
- Lower Total Interest: You’ll pay significantly less interest overall, saving you money in the long run.
- Faster Debt Repayment: You’ll own your car outright sooner, freeing you from monthly payments and building equity faster.
- Reduced Risk: You’ll be less likely to be underwater on your loan and face a lower risk of default.
However, shorter-term loans do come with higher monthly payments, which might strain your budget. They may also require a larger down payment to keep monthly payments manageable, and you might need to choose a less expensive vehicle to fit within your budget.
Choosing the Right Loan Term for You
Deciding whether an 84-month car loan is right for you requires careful consideration of your financial situation and priorities.
Consider an 84-month loan if:
- Your primary concern is the lowest possible monthly payment, and you can comfortably afford the payments for the entire 7-year term.
- You are confident in your long-term financial stability and ability to make consistent payments.
- You prioritize affording a specific vehicle over minimizing the total cost of ownership.
Avoid an 84-month loan if:
- You want to minimize the total amount of interest you pay.
- You prefer to pay off your car loan quickly and build equity sooner.
- You are concerned about vehicle depreciation and the risk of being underwater on your loan.
- You prefer financial flexibility and want to reduce the long-term debt burden.
Ideally, aim for the shortest loan term you can comfortably afford. Evaluate your income, savings, and monthly expenses to determine a realistic monthly payment. Compare loan options with different terms and interest rates to understand the total cost implications. While an 84-month car loan might seem appealing due to its lower monthly payments, remember to weigh the long-term financial disadvantages carefully before making a decision.
