Question

Is a 84 month $21, 000 car loan with 8% apr a bad idea ?  

Answer 1

Hi  accountant here. If you did this loan you would be paying just under 6, 500 in interest and bringing your loan up to $27, 500. You will most likely be upside down in your loan in the future if you ever wanted to sell/trade it. Depending on your credit, that may explain the high interest on the loan.  

Comments

@guitar thanks for the advice. So. bad news is I already accepted the loan. (My fiancé has income but bad credit. I have good credit and minimal income) so this is the loan they could give us. My question is. we could refinance the loan right? We chose this loan because the payment would be 330 (low) but we could probably do $400 payment a month. Would they let me finance?  

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@bergman272 depending on who you did the loan through - if it was a dealership probably not. I highly recommend if you choose a dealership for a lender to look at your contract. There is typically a clause that states you cannot refinance the loan for a certain amount of time (typically 6 months to a year) or you will be charged a penalty fee. Once outside of that time frame, highly recommend asking your bank about refinancing or find a local credit union - in my experience credit unions tend to have better rates.  

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Wow so after the amount of time stated. I can completely switch lenders?  

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@guitar the lender is citizens one

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@bergman272 not simply switch lenders - you have to apply for a new auto loan all over again with a new lender. Just make sure to read every line of your contract.  

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@bergman272 That is a bank loan and can be very tricky. I would try reaching back out to them and see if there is a possibility to modify the loan for lower term and/or interest if you are able to pay higher monthly payments.  

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@guitar okay thanks you so much for your help

Answer 2

Wow. Yeah. A normal loan is 5 years (60months) and that interest is high. Mine was 3% for 60 months.  

Comments

I remember when it was three.  

Answer 3

I usually get 5 years and pay it off early in 3

Answer 4

That's high interest . You should try to make the max length 5 years . Ideally 4 if you can swing it

Answer 5

Do you want to be paying off your car 7 years from now? That’s a high interest rate for that long of a loan. Our credit has never really been that great, and our last loan we did was 3%, on a $9, 000 loan.  

Answer 6

84 months!  

Answer 7

Extremely. Run. The worst car accidents happen in the dealership finance office.  

Answer 8

Abort mission. Not a good idea.  

Answer 9

Yikes that’s a long time to pay on a car. I always try to do a 3 or 5 year loan and as low an interest you can get

Answer 10

Horrible idea. That interest rate is so higher and 84 months is 7 years. That’s a lot of interest and a long time for a vehicle to be paid off.  

Answer 11

Yes. Get a 5000 car for now and save for a nicer one later.  

Answer 12

Yes. 100 times yes.  

Answer 13

Omg 8 percent. No no no

Answer 14

Yes! Don’t do that

Answer 15

I got a 6% APR for 5 years and that’s my first car loan / first loan besides education loans. 8% is steep!  

Answer 16

8% is really high. Don't go through a dealership for a car loan. They make money by selling you a higher interest rate. Get your own financing through capital one or a credit union, your bank, e. t. c

Answer 17

Don't do it!  

Answer 18

Omg YES!  

Answer 19

I would not take that for 84 months. 60 months would be 5 years. It’s not worth it to stretch it out that long. You’ll end up upside down.  

Answer 20

Why so high ‍♀️

Answer 21

No too much :/ :(

Answer 22

I financed about 8k at 8%. I paid it off in 10 months. (Loan was 42 months).  

Answer 23

My current interest is 3. 2, that seems really high. Check out a credit union in your area, they usually have good rates.  

Answer 24

That’s how they get people. They make a ton of money and by the time the car is kid off you likely will need another

Answer 25

8% is insane. Unless you refi it with a credit union ASAP and get a lower rate.  

Answer 26

I just got an 84 month car loan for 4%

Answer 27

Never get a loan for a car for more than 5 years.  

Answer 28

Yes it’s a bad idea! 84 months?  

Answer 29

I did 84 mths on a camper and high interest it's been 6 yrs and and still owed 17, 000 on it I luckily got an inheretance and paid it off such a straign on the budget the camper was 24, 000 and all said and done with I interest I paid 50, 000on a 19000 dollar camper I will never get my money back on this at all

Answer 30

Holy yes!  

Answer 31

Too long and too high, maybe shop around?  

Answer 32

Yes. Very bad idea.  

Answer 33

84 months is a long time. So much money would be going to interest.  

Answer 34

I wouldn’t do a 7 year car loan

Answer 35

Omg ouch. That burns!  

Answer 36

That’s a ridiculous rate and way too long to finance a car.  

Answer 37

8%?! Don’t do it!  

Answer 38

Yep. 84 months is insane!  

Answer 39

Don’t do it!  

Answer 40

Yes, you should be on a 5 maybe 6 year loan

Answer 41

Most definitely. 8 years is a very long time to pay for a vehicle, and a lot of interest

Answer 42

Sorry 7 years

Answer 43

Yes! That’s so high apr

Answer 44

I think mine is 84 months on a brand new car. But I’m pretty sure the interest rate isn’t even 5% on it. It’s a 2020 I bought this year, not my wisest financial decision but it’s done. I would say no simply for the upside down factor. I’m technically paying about 31K on a car that retails for about 24K. Going to take a while to dig out as I can’t pour money into it right now. Unless you can, run away from that deal

Answer 45

Bad bad bad very bad

Answer 46

When I got my car about 5 or 6 years ago - I had half the money to put down and asked for a 3 year loan max. My interest rate was less than 1% or something (credit unions are the best) and the woman told me she's not seen anything less than 5 year loan for the 10 years she's been working at that car dealership! I ended up paying off my loan 6 months early as well. It seems like people don't really listen to anything past what the monthly payment is gonna be. My parents went to get a new car and the guy said they don't offer anything below 5 year loans and that he had never seen a credit score as high as my parents score and he had been working there for 20 years. My parents pay all their bills on time and try to pay off debt as early as possible.  

Answer 47

Horrible idea.  

Answer 48

Omg dont do it!  

Answer 49

Yes. Check your local credit unions for way better rates

Answer 50

7yr loan at 8%. Run away that 8% will kill you. 7x12=84 months

Answer 51

Too high and too long. With COVID-19, there have been lower rates advertised. Maybe check with your bank or reputable car dealer options.  

Answer 52

Almost half of each monthly payment would be going to interest. You'd end up paying over $27, 000 for the car ($6, 500 in interest alone). 60 months at 5% would only be $2, 700 in interest.  

Answer 53

You'll pay an extra 6k or so in interest over the life of the loan. That's a lot. And 84 months is 7 years. you'll most likely never get out from underwater on that loan

Answer 54

Very bad

Answer 55

Credit unions have better interest rates for used cars right now. Check with them first. If it’s a new car, it should be 0% right now.  

Answer 56

Very bad

Answer 57

That is ridiculous. Please don’t do that.  

Answer 58

Oh yeah. super bad. I am assuming your credit isn’t very good because a lot of places have super low rates right now.  

Answer 59

Right now people are offering 0% interest! Wait and get last years model and save big. Better yet a used car that has been checked by a mechanic so you don’t have make payments or accrue interest. I’ve never owned new and it makes a huge difference financially. The money we save on insurance alone is worth it!  

Answer 60

Look on your own if yhat is the dealership giving you that number. Very high unless no money down and bad credit.  

Answer 61

Yes, like others have said it is a bad idea. If possible, aim for a 3-4 year car loan max.  

Answer 62

Yes, high interest and long loan for a depreciating asset. Buy used in cash if at all possible or at least set your sights a bit lower.  

Answer 63

We are all hoping you are reading these comments as you back out of that car lot! Please please please don’t do it! Get a less expensive, older car that will last a few years. Please don’t do it!  

Comments

@vannesavanness I did it on Friday  can I refinance?  

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@vannesavanness but im curious what options people with bad credit have right now if they do not have that much cash to get a car upfront and need one? I say this because I too have an 8 year 8% loan since 2016 and I am considering turning it in for a different one (I owe about 10k) and my SO’s car died totally so he NEEDS a car right now as well

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@bergman272 no you can’t refinance but you can put more cash towards it anytime.  

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@mihe482 I know! Ugh it’s so hard. I’m not judging for sure. But if it were me, I would have bought a $10, 000 car if there was no other option w the interest rate. So don’t miss a single payment, pay early, pay more than the minimum if possible. Get out of that debt ASAP bc it will help your credit score next time you need a car. And I know for myself that for so long I lived in a moment to moment crisis situation. Now, I’m trying ( not perfect) to plan for a new(ish) car, and saving money as I can. For me, I had to stop living so much in the present and had to tell myself no a lot to plan some for the future. ❤️

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@vannesavanness thanks for your reply! I mean I still owe 10k on my 2014 Jeep so I suppose I can keep just paying it off and NOT add it to a new one but I should definitely try to convince my SO to look for a car that’s 10k or under. His credit is terrible but he has NO other option for a car right now and will only be able to put down like 2k  

Answer 64

Yes save up more money and go for a shorter term.  

Answer 65

Whoa yeah that’s bad . My interest at a credit union was 1. 8% for 48 months.  

Answer 66

Oh my gosh yes

Answer 67

It’s what a wise man I’ve heard calls “dumb with zero”. Save the cash. Unless you are a millionaire, you shouldn’t have more than 50% of your income in cars, so unless you make OVER $42k it’s still not a good idea.  

Answer 68

8%?! Yes. Way too high for way too many months. You should be able to get a much better rate. If you’re car shopping, wait until the end of the month, that’s when they make the best deals. Also the economy won’t recover that quickly so maybe even waiting a month or two would be better. Especially if you’re buying new, wait until next year’s models come out, then this year’s models will be a better price.  

Answer 69

8 years is a very long time for a vehicle( with very high interest) even new, due to the wear and tear.  

Answer 70

Very bad idea.  

Answer 71

8% is a lot

Answer 72

Do you have poor credit and this is the best you can get ? Interest rate wise. Theres options to get a loan like that and build credit for a year and then go in and get it lowered.  

Answer 73

I wouldn’t do it  

Answer 74

A 7 year car loan at 8%? Yes, it is a very bad idea.  

Answer 75

Way too much. especially now, so many dealerships have a lot of deals going on.