A 97-Month Car Loan?! Really?

You may have read that some banks are offering consumers as much as a 97-month car loan. Really? The idea is to stretch out the terms long enough to reduce the monthly payment. But an eight-year financing deal screams “upside down’’ again and again. Let’s admit this is a subprime car loan at the least, and a scheme close to indentured servitude at best. Wait a minute — weren’t subprime housing loans the herald of our latest recession?

There is no doubt that today’s vehicles are engineering and manufacturing wonders – more durable than ever before. There is no doubt that doubling the terms could keep customers out of competitors’ showrooms for twice as long. But eight years?! You can age scotch and bourbon that long and improve the taste, but cars are like association presidents: they don’t necessarily age gracefully. Eight years will keep consumers away from significant safety improvements, technology upgrades and mileage gains. And when these go upside down, the value of used vehicles will drop faster than a cold beer on a hot day.

Do we learn nothing from history? Especially recent history?

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3 Responses to A 97-Month Car Loan?! Really?

  1. Bill Bass says:

    It seems like it would definitely trigger a bunch of 5 or 6 year old cars that get walked away from. Just think of it, all the repairs of a used car with the added benefit of a new car payment!

  2. rcfjr says:

    FYI: Every car purchase, for personal use, is upside down from the start. When these 8 year term cars come onto the used car market they will be on the “B” lots where cars usually wind up after the new car smell and the warranty expires. This will only create a slight price increase in the slightly aged variety where these 8 year term cars are excluded. Besides, most might opt to trade in before the 8 years. These buyers at the 8 year term would probably miss out on the new goodies anyhow. Their budget only allowing the 8 year term proves that. All used car buyers don’t get the “significant safety improvements, technology upgrades and mileage gains”. History shows there is only a blip in the short term.

  3. Yeah, absolutely agree. You have struck the nail on the head.

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