84 month auto loan?

84 month auto loan?

Has anyone gotten an 84 month auto loan for the 3?

If so, which bank have you gone with, and what % rate did they give you?


ReD eXiLe ms us | 17. kesäkuu 2018

I'm told that a car loan of that length is always a bad idea. Some argue in terms of a 'cheap money' principle and do so anyway. Best of luck to you and anyone else that chooses an 84-month financing option.

"Wait... My 'COMMON SENSE' is tingling..." -- DEADPOOL

jjgunn | 17. kesäkuu 2018

Figuring a $60k car & $12k down (20%) at 3.0% interest.

Your payment difference is $230 per month from 84 months ($630) to 60 months. ($860)

Do yourself a favor & Get the 60 month loan.

chrisnarez | 17. kesäkuu 2018

For 84 months:
4.6% at coasthills Credit Union.
3.58% at EECU (but must sign up for auto-pay 4.08% if u don’t)
3.74% at Noble Credit Union

They all offer lower rates for 72 or 60 months. What others say is the same thing I have heard: you should never get a 84 month loan.

There are articles regarding this (google “84 months loans”).

With that said: I am looking at an 84 month loan as well. I am young and probably shouldn’t buy this car, but I haven’t been this excited for a vehicle ever. Solar on the home=being self reliant. That’s really important to me.

rdavis | 17. kesäkuu 2018

That’s a long term for a depreciating asset. Unless you plan to put a large sum down to keep yourself from being upside down or they are offering 0% interest, I’d stay away from anything longer than 60. Personably I don’t even care for 60 month terms for a car but I’m more the exception than rule in that case.

Ianandraye | 17. kesäkuu 2018

In CA, there is no prepayment penalty, so I didn't see anything wrong with an 84 month loan to keep the minimum monthly cost down and then throwing any additional funds towards the loan when possible.

RadOne | 17. kesäkuu 2018

Stay away from an 84 mo. loan. Personally, I would not buy a vehicle I couldn't pay for outright by check if I wanted to. I will take a partial loan for 48mo. at a low interest rate so I can keep the money invested.

colvinam | 17. kesäkuu 2018

Cheap car loans are a good thing if you actually invest the money you would've paid the car of with. There is absolutely nothing wrong with an 84 month loan as long as you could get close to equal interest rate.

RadOne | 17. kesäkuu 2018

"Why no one should get an 84-month car loan ever"

ksalberta | 17. kesäkuu 2018

I would not do this at all, unless you had the money to actually pay for the car but it was locked up somehow (would cost a high penalty to access, but accessible in case you really needed to do it). That is very rarely the case.

First, over the life of the loan you will pay considerably more for the car. Second, the lender is somehow going to have to cover you when you get acutely underwater on the loan, which you will. So that will cost you some. Third, you ought to be paying higher insurance to really cover yourself. That will cost you additionally. Finally, the original warranty is going to expire and you will be very underwater on the car and you will then have to pay additional for extended warranty coverage, or have to set aside money for those repairs - while you are still paying the loan off.

I really hate to see anyone taking out a loan longer than the original warranty on the car. Anyone who does will find him- or herself with an additional payment before the loan runs out. Remember, on a seven year loan you are acutely underwater at that time. If the car needs an expensive repair in year five, lord knows you won't be able to sell the car for enough to clear the loan!

In almost all cases, a borrower seeking a loan that long can't really afford the car. Instead of even contemplating this, sit down and figure out what you can do to make that car affordable.

What if your living situation changes and you have no way to charge the car? If you are worried about an extra $200 a month, you are not really financially stable and a lot of things can happen.

Defer the purchase and save more for it, to lower your loan payments. Or figure out what other bills you can cut to lower your monthly costs. With a loan that long, you are just setting yourself up for seven years in which bad luck will turn into worse luck.

ksalberta | 17. kesäkuu 2018

PS: Banks/credit unions making these types of loans except in really constricted circumstances are not the most ethical people, and if I knew of one that would offer these terms on this type of car, I would automatically consider the institution in a bad light, so of course I would not recommend using them.

This type of loan is inherently wrong in over 95% of the cases!

RedTeslaModel3 | 17. kesäkuu 2018

I had PVFCU 84 months for 1.99%. Folks said 84 month is a terrible idea, but i downed 30% and with gas saving a month, its almost a free car. My car delivered in March so interest rate is still low then, not sure if that rate is stilll being offered. I wouldnt recommend 84 months if its not a Tesla. Electric car should be a problem free.

MalibuRed | 17. kesäkuu 2018

I recommend no more than a 5 year loan. If the rates are a lot lower try 4 years. If you can’t afford the 2-5 year payment maybe the car is too much for you. If you do get a loan make sure to get GAP insurance. Trust me...especially in California where people buy $5k property/liability coverage.

RadOne | 17. kesäkuu 2018

@ReD. Show me the math to a "free car." I would like one also. Even if you had the equivalent amount invested, you would probably have to earn around 12%/yr. to have it "free" after 84mo. Pretty tough to do. Most people with 84mo. loans probably don't have the money either. Average driver may save $100/mo. in energy.

Alex_SD | 17. kesäkuu 2018

Those can’t afford a brand new M3 should just relax and wait one or two years. Look at the Model S depreciation: 50% after 3-4 years! Just wait until the used M3s are more affordable...

mntlvr23 | 17. kesäkuu 2018

I remember when the common choice was between 3 and 4 year car loans. 5 year loans seemed ridiculous at the time. Times have changed.

RedTeslaModel3 | 17. kesäkuu 2018

I drive about 3000 miles minimum a month. My last car was using 91 gas & German car for maintenance. Also the insurance coverage on Tesla is cheaper than my last 13 yrs old car (sport + no safety feature). My car bill payment is $450 a month. 350 saving in gas + 100 saving on insurance. Thats not including maintenance. Like i say, i am an exceptional case, with 1.99% on interest, I rather keep money for investment myself cuz its surely beat 1.99.

my car is a ninja | 17. kesäkuu 2018

@OP This topic will generate A LOT of different views and opinions regarding this matter. However, there are a couple of components to consider, no matter the length of loan. They are interest rate and prepayment penalty. Regarding interest rate, the rate is important but it's better you also calculate the interest paid through length of the loan. A lot of times, the difference between a 5-year and 8-year loan may only be a couple thousand dollars over lifetime.

Secondly, prepayment penalty is important. Most cases, auto loans don't have prepayment penalties. You can apply your bonus received from your job or your tax return to pay down the auto loan. However, keep in mind that your monthly payments will not decrease. If you have a lump sum to spare, it's best to always tackle down credit card debts first.

Unlike others in this thread, I am electing to go for a 8-year loan. Primary reasons is to keep my DTI low. Ultimately, my auto loan's interest rate is as low if not lower than most student loans. Hopefully, this post helped.

Tuning In | 17. kesäkuu 2018

At that length you’re going to be upside down for the majority of the loan term. You’d end up paying extra money for gaap insurance (which could have gone toward principle) or else taking a risk that you’d end up holding the bag on the balance if someone totals your car.

MNGreene | 17. kesäkuu 2018

Generally great comments! I'd like to clarify one point. If you are planning on taking out an auto loan and investing your cash on hand, you have to do more than beat the loan interest rate due to income taxes (I am assuming this is not a business car). You are using after-tax dollars to pay the car loan. So many high earners would need to earn 5 percent on investments to net 3.5 percent after tax, which is what you need to pay a 3.5 percent loan and break even. It is not impossible to earn that kind of return, but I just wanted to point this out.

ksalberta | 18. kesäkuu 2018

RedTesla - it sounds like what you are doing makes sense - but you had 30% to put down. That deals with the underwater issue nicely. Also you got a very, very low interest rate, probably not available now, which cuts other costs.

For extreme commuters, the gas savings on a Tesla are real and do offset many of the costs of carrying the loan.

Most people who are doing the longer term for affordability are in a very different position.

JuJo0 | 18. kesäkuu 2018

Some well-known CU's offer even longer terms. For example, 1st United CU offers 96 month loans @ 5% lol

gballant4570 | 18. kesäkuu 2018

OP, I know this isn't what you want to hear..... I made my last car payment in 1979. I decided at that time I would pay cash for cars, and not make payments. Of course that meant that I bought nothing but used cars for a long time, but the day came when I could buy new cars as well. That sure took a while though. But nearly 40 years without any car payments has other perks......

Brian B | 18. kesäkuu 2018

@gballant4570 40 years of no car payments also has its negatives. If you pay up front every time, you lose the ability to use that money to make money for you, especially with higher priced cars. You also lose it as a secondary emergency fund.

Businesses do this all the time. They will push off payments for services or equipment for as long as possible in order to even use that money for an extra 15-30 days. Companies even go from bi-weekly paychecks to monthly checks for this reason. If you can make more investing the saved money than the interest rate you pay, it makes sense.

For instance, If you get a $52,575 loan at 1.99% for 6 months (what i got for my 3) you pay $3,244.70 in interest over that time. I bought stock (option) in Tesla for ~$2500 the day before the shareholder's meeting. I sold that the next week for a *profit* of about $8K. I barely used any of the amount of the car payments I saved (actually used less than the interest i would have paid), and still made 2.5 times what I'm paying extra in interest. This is just 1 or two weeks. Imagine doing 10% of that amount of profit every couple of months during the lifetime of the loan, or even just the first 3 years (even for that it's ~ $16,000)

Also, when you pay up front, you don't get that money back if something were to come up, unless you sell the car. Spreading the payments out allows you to pay more if you want and not if you don't. In an emergency, you would still have that money to use immediately, and still have time to recover to finish paying the car off (and not lose the car).

jcxg | 23. kesäkuu 2018

Don’t listen to these people that say “if you can’t afford a 60 month loan, maybe wait a few years” Screw that. Nothing wrong with an 84 month loan if you can get a low interest rate, ESPECIALLY if you plan on keeping the car a long time. The asset will depreciate at the same rate. I have an 84 month 2.49% on mine. I could have just bought it outright, but that’s silly at 2.49%.

jrlevy | 24. kesäkuu 2018

I will present the flip side to this argument. I obtained financing through my credit union who was offering very generous rates of 1.99% from terms of 24 months up to 84 months. Yes, that's right. Regardless of whether you took a 24 month term or a 84 month term, the rate was 1.99%.

As I understand the concept of the time value of my money and most certainly would be earning more than a 2% annualized return on my money, I took the 84 months.

I have every intention of paying the loan off sooner than that (likely in 48 months) but why would I limit myself to a higher payment if I don't need to and there's no financial downside?

RadOne | 24. kesäkuu 2018

@jrlevy. There is nothing wrong with your strategy, it is the smart thing if you have the money invested and earning more than the interest charge. The argument is if you have no savings and are stretching payments out longer because you don't have the money then can you really afford it or should you be saving instead like you already did?

pierpont | 24. kesäkuu 2018

look, the rate is slightly higher for the 7 year loan, but you're extending payments 24x. that adds up to close to $5,000 in extra interest. if you want to pay that to have a few hundred extra each month, now, OK. but that is the financial impact over the long-run.

GODOFTHUNDER | 24. kesäkuu 2018

My credit union offered me the same rate 2.74% for up to 84 months. 12, 24, 36, 48, 60, etc. its 2.74%. Why not take the 84 if there is no prepayment penalty. I plan on paying the car off in 4 or 5 years, so why strap yourself down with a larger payment if there is no financial benefit. Its just a little insurance if you are injured and out of work for a few months or lose your job.

lilbean | 24. kesäkuu 2018

Great article, @RadOne.

pjalan | 24. kesäkuu 2018

@ravincent if same rate I’d take 84 months anytime esp with no prepay it’s no brainer

Ctinnn | 24. kesäkuu 2018

My credit union also offered the same rate of 2.49% up to 84 months.

I'm putting 35% down and I get over $500 a month in mileage reimbursement from my job. It will cost me less than $30 a month to use it for work. Essentially, I will only be paying for insurance to drive my Model 3.

This is the longest car loan we've ever taken out. This is also the most "expensive" vehicle we've ever purchased even though we could have bought a vehicle at that price a long time ago. I never cared much about cars outside of the color and always opted for the basic trim. My husband's car is payed off early like we have done with all of our vehicles. I don't see this taking me more than 5 years to pay off but I like the freedom of lower payments.

This was an emotional purchase for me. My husband has a more financial sound mind than I do but he even came to the conclusion that it was a "no brainer".

dmaini | 24. kesäkuu 2018

The only time I take a car loan is when there is a 0% APR deal. I got this on My Nissan Leaf and also on my Audi after I had negotiated crazily and brought the price down as much as I could with some free accessories thrown in etc. I rather pay for my cars in full.

kobejash11 | 16. joulukuu 2019

Why you should weigh the option of whether to dealer finance or car loan:

adoh2010 | 16. joulukuu 2019

I have a 6 year loan and this was my first finance anything so I had to put half down. The problem I have is that due to my horrible driving record I pay 220 a month in insurance and 310 a month in payments. As soon as I make more money I'll refinance to a shorter term so I can switch to liability asap. Liability is really cheap for the model 3, 60 a month with my horrible record, cheaper than my old Acura. So, the main problems you'll have with an even longer term is paying more down and paying almost as much in insurance as loan.

yudansha™ | 16. joulukuu 2019

I wish my bank offered an 84-month loan; I took a 72-month loan below 3%. You could make a lot more even on index funds.

RayNLA | 16. joulukuu 2019

Make sure you get gap insurance!

dangolfy777 | 30. tammikuu 2020

If you take such a long term loan you will overpay too much. that is an illusion when you pay a little every month you are thinking that you spend less money, but if you calculate you will understand that in this extra 20 months you paid a huge amount of money which you could save for something else, better use the simple 60-day loan for 3%. Or I suggest you paying attention to they have great car finance! I used their services last time and I am very satisfied.

andy.connor.e | 30. tammikuu 2020

I'd never recommend 7 year loan for a car. If you cant pay the 5 year loan, dont get the car.

jordanrichard | 30. tammikuu 2020

"If you cant pay the 5 year loan, dont get the car."

Of course there was a time when people said that if you can't afford to pay cash for the car, you shouldn't get the car.

The avg price of a car has gone up significantly since the 5yr car loan was created.

Unfortunately our entire economy is based on people going into debt. If everyone paid cash for everything our economy would go down the toilet.

andy.connor.e | 30. tammikuu 2020

yea, i just say that because 5 years is about the expected duration of ownership for a vehicle. Although a Tesla may be another story since it improves over time. But you are paying a significantly larger amount of interest extending it by 2 years.

Lonestar10_1999 | 30. tammikuu 2020

Reading through the thread, folks are using $60k as the final purchase figure where a portion would be the down payment and the remainder to be financed over 84 months.

As I see it, the need for 84 months could mean that the M3 is not affordable for the OP. But if the M3 is the one and only car under consideration, maybe try to obtain it with less options to get the price down. Perhaps the OP can get the SR+ with no options with just a 60 month loan.

Honestly, the SR+ is a great car at an affordable price.

ReD eXiLe ms us | 30. tammikuu 2020

jordanrichard rote, "If everyone paid cash for everything our economy would go down the toilet."

So...? The problem with the 'If everyone...' were to do something, disaster is guaranteed principle is that it tends to always ignore very important points of contention. Perhaps, the 'economy' you speak of, that is so firmly reliant upon 'everyone' borrowing money, is not so stable after all and thereby NEEDS to fail. Literally an unsteady, unstable, unsupported house of cards. All the worst aspects of a Ponzi scheme, disguised by a whispy thin veneer of legitimacy to validate it.

My gut feeling is that statement is false on many levels. Why is it that amortization is even allowed to remain legal to begin with? Seems a very unfair and likely unethical means of doing business.

andy.connor.e | 30. tammikuu 2020

"If everyone paid cash for everything our economy would go down the toilet."

No, if everyone paid cash for everything then banks wouldnt get rich as shit off selling you money you dont have. It would be the best thing ever because then there wouldnt be insane inflation off of interest.

Ever consider that if every american dollar in the country was returned to the banks, it wouldnt be enough to pay the interest? How do you pay the interest when every dollar is printed with debt.

raqball | 30. tammikuu 2020

You only live once.. If 84 an month term gets the payments into affordable range for your budget and you want the car then go for it... It's your money.. Yes you will pay more in interest but it might be worth it to you..

I would not do 84 months but I wont judge anyone who wants to or does...

Bighorn | 30. tammikuu 2020

There were people getting 0.9% interest rates on Model Ses, so the interest cost doesn't really factor. 3220 dollars on a $100,000 loan over 7 years. And you're paying with sequentially inflated dollars. Generally, it's not advisable, but there are cases where it's not a bad decision.

yudansha™ | 30. tammikuu 2020

I could pay cash for the car, but I prefer to invest most of our money, so a loan under 3% is a no-brainer for me.

RayNLA | 30. tammikuu 2020

84 month loan?
Do what you have to do, but gap insurance is a must!

FactDoc | 31. tammikuu 2020

The only reason to take a 84 months loan is if you take your 50k, invest it in TSLA for 83 months, sell 1 TSLA stock every month to pay for your Model 3

Turn your 50k in 200k and pay your Model 3 at the same time

If you have to work to pay that loan for 84 months then you are NOT doing the right thing. I REPEAT, you are NOT doing the right thing.

andy.connor.e | 31. tammikuu 2020

I'd just pay the car off completely and not even have a loan to begin with.

Lariardo | 31. tammikuu 2020

This link will give you the latest best loan rates throughout the USA.