84 Month Car Loans In Canada: Everything You Need To Know

Longer auto loans are becoming increasingly popular. Not only can you borrow more, you can also lower your monthly payments. This can make many more cars affordable to limited budgets and is one of the reasons we see so many of them.

But is an 84 car loan a good idea? Do they make financial sense? What’s the best auto loan term to get? Join us as we cover these questions in this quick article.

84 Month Car Loans

An 84 month auto loan equates to 7 years. That’s a long time in car terms. A lot can change. New models, new technology and new safety equipment will all arrive within that time and completely change the driving landscape.

With automotive technology gathering pace all the time, 84 months can seem a very long time.

Yet, the average period of car ownership is between 5-7 years. Very few people can afford to buy a new car every couple of years, which is why they tend to lease them.

Car ownership is for longer.

Pros of Financing an 84 Month Car Loan

• Opens Up Options: For example you want an electric car or need a truck for work. Longer auto loans mean more manageable monthly payments. As you will be very hard pressed to find cheaper vehicles that fit your needs, a longer auto loan may be your only option.

• Lower Monthly Payments: Whether you want lower payments to keep things affordable or are paying off other debts at the same time, lower monthly payments can be necessary.

Cons of Financing an 84 Month Car Loan

• Things Change With Time: If you’re the type of person who likes to change their car often, a longer auto loan may not work for you. It will mean regularly switching loans and resetting the front loaded interest clock which can means paying more interest.

• Negative Equity: If you don’t like the idea of negative equity, and we know a few people that don’t, longer loans are not for you. The value of the car will drop faster than the loan to begin with and will take longer to right itself. Not an issue if you plan to keep the car but isn’t something people are comfortable with.

• Spend More on Interest: Longer auto loans mean paying more interest over the term. The APR may be lower but you’ll be paying it for longer so will usually pay more interest over the term.

For example, a $20,000 auto loan over 5 years, 60 months at 4.5% interest means total interest of $2,371. The same loan over 84 months at the same rate means paying $3,352 over the term. That’s an extra $1,000 in interest!

84 Month Car Loans Are Situation Dependant

As you can see, a longer auto loan can work in some situations but not for others.

If you don’t like the idea of a longer term loan, consider putting more money down or buying a cheaper car. If you have to resort to an 84 month loan just so you can afford a car, perhaps you’re overspending!

If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.