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96 Month Car Loans in Canada: Are They a Good Idea?

96 Month Car Loans in Canada: Are They a Good Idea?

If you live in Ontario and are looking to buy a new car, you may be aware of the 96-month auto loan option. Yes, 96 months—you read that right. That's a whopping eight years' worth of monthly car payments.

 

But before you jump at the chance to pay less each month, it's crucial to know what a 96-month auto loan actually entails and whether it's the best option for you.

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Pros of 96-Month Car Loans

Let's start by discussing the pros of a 96-month car loan. The cheaper monthly costs are the main benefit. Your monthly payments will be substantially less than they would be with a conventional four- or five-year loan since the loan term is dispersed over such a lengthy period of time.

 

For those who want a brand-new car but may not have the budget for higher monthly payments, this might be a tremendous relief.

 

The ability to purchase a more expensive car is another benefit. You might be able to buy a car with more amenities or a higher price tag with lower monthly payments than you would have been able to with a shorter loan period.

 

Cons of 96-Month Car Loans

However, it's equally important to take into account the drawbacks of a 96-month car loan. The major drawback is the loan's overall cost. You will pay more in interest over the course of the loan even though your monthly payments are smaller.

 

In actuality, a 96-month auto loan can end up costing you significantly more than a conventional loan.

 

The value of the car will also need to be taken into account. Since cars lose value quickly, a 96-month auto loan will require you to make payments long after the vehicle has lost all of its value. If you want to sell the car before the loan is repaid, this could place you in a precarious financial position.

 

Your Needs in 8 Years

It's crucial to take your future ambitions into account. Eight years is a significant period of time during which a lot can occur in your life. In eight years, will you still require the same vehicle?

 

Your financial condition will it alter? Because the future is unpredictable, it's crucial to consider the long-term effects of a 96-month car loan.

 

The Financial Services Regulatory Authority (FSRA) in Ontario is in charge of overseeing auto loans, including 96-month auto loans. The overall cost of borrowing as well as any fees and charges related to the loan must be disclosed by lenders. Before signing any loan agreements, it's crucial to thoroughly read this material.

 

Ultimately, the decision to get a 96-month car loan in Ontario is a personal one. It's important to weigh the pros and cons and consider your own financial situation and future plans. If you decide to go for it, make sure to review all loan documents carefully and work with a reputable lender.

 

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