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

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

Posted on May 13, 2021

Not that long ago, 84 and 96 month car loans were all but unheard of. The majority of us got 60 month loans and that was that. The rising cost of cars has caused us to borrow for longer and now those 7-8 loans are mainstream. But are they a good idea?

Our Paris auto loan team investigates.

Arguably, if you have to borrow over such a long term, you cannot afford to borrow that much. But as these types of loans are readily available, it’s difficult to rein yourself in when you’re car shopping.

We know, we have been there ourselves!

84 or 96 month car loans in Paris

To help you decide whether 84 or 96 month car loans are a good idea or not, let’s outline their pros and cons. It’s our favourite way of helping customers make decisions.

The pros of 84 or 96 month car loans:

Borrow more – The main benefit of 84 or 96 month car loans is so you can borrow more while keeping the loan affordable. Some of this will be driven by the higher cost of new cars but some will be because we want to drive something nice.

Lower monthly payments – The other side of that is lower monthly payments for that larger amount. Borrowing more means paying back more and stretching the term is the main way to keep things affordable.

Lower interest rates – Some longer car loans will attract lower rates. This can be a deciding factor for some borrowers.

The cons of 84 or 96 month car loans:

Pay more interest over the term – Borrow more, pay back more, borrow longer, pay more interest. As interest is calculated over the term, the longer that loan term, the more interest you’ll pay. Even if it’s at a lower rate, the overall cost will be higher.

Negative equity – Negative equity or being upside down is common with new car purchases and nothing to worry about. Some people just don’t like the thought of it so will avoid it at all costs. Longer loans can mean being upside down for longer depending on your down payment.

Situations change – Your financial situation may be stable now but who knows what it will be like in 5-8 years’ time? Longer loans mean more of your life can change while you’re paying it off.

Car could be out of warranty by the end – The car you buy could be 7-8 years old by the time it’s paid off. Depending on the car and your situation, this can work for you or not.

As you can see, there are pros and cons to long-term car loans. Some of these will resonate with you and others won’t. At least now you should have a clearer picture of what’s involved and any potential risks.

When you’re ready to take out your Paris car loan, you know where we are!

When you’re ready for a car lease or loan, get in touch with the Paris auto loan experts at Northway Ford for great deals on auto finance.

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