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Is a 96-month car loan a good idea?
I want to get low monthly payments and the dealer is offering a 96-month car loan. Is this a good idea?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Longer
car loans
are becoming more popular among Americans. Currently, about 1% of people have a 96-month loan. While that may not seem like a ton of people lining up for it, it’s actually the highest number ever reported by lenders.Whether or not a 96-month loan is a good idea is debatable. Essentially, it comes with both benefits and drawbacks.
Pros of a 96-month loan:
- Lower monthly payments
- The ability to qualify for a more expensive vehicle
- More financial flexibility each month due to lower monthly payments
Cons of a 96-month loan:
- Higher interest rates
- More interest paid over the life of the loan
- Fewer lenders to work with
- Negative equity for a longer time
- Potential to pay for repairs out of pocket after the car’s warranty ends
Weighing both sides of a 96-month car loan is important, but if a low monthly payment is your ultimate goal, this loan length might fit the bill.
One other consideration is that your lender will require full coverage auto insurance for the life of the loan, which can get expensive for a car that’s five or six years old—or more. But you have an ally.
Jerry
is a full-service car insurance broker that allows you to compare rates from numerous companies to get the best rate possible. If you’re going for a 96-month loan, Jerry can provide you with the savings and insurance you need.View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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