Cars are getting more and more expensive, especially with electric vehicles on the horizon. Since January of this year, the average price of a new car was heading towards $50,000. But automakers and their respective finance companies want you to know they’re here for you. They’ll do everything they can to make sure the monthly payment looks attractive and affordable, and tThis is why they pushed the loan conditions further. Honda is the latest automaker to jump on the long-term bandwagon, as Direct Cars reports that the company now offers 84-month loans.
“But wait,” you can say. “Didn’t Honda say these types of loans were no good?” You are right, Dear reader. Back in 2015, talking to Bloomberg at the North American International Auto Show, Honda’s U.S. sales chief John Mendel said Honda won’t get an 84-month loan, saying, “You ring the bell for a new car sale, but this customer is saddled – he’s so stretched.” He went on to call the long terms “stupid not just for us, but for the industry”.
Ironically, 84 months later, the company is now offering exactly what it said it wouldn’t. Previously, the longest term you could do with Honda was just 72 months. But the company says 84-month terms will be offered after dealer feedback.
While that 84-month term might make this payment on an If attractive, it’s not a good idea in the long run. For one thing, the vehicle will lose value faster than you can pay off the loan, and the long term means a person will pay more interest, especially if a buyer doesn’t have a level credit score. 1 (scores of 700 or more).
The worst credit Honda will finance for 84 months is what is called Level 8, or a credit score of 660 to 669. However, with a rate of 7.85% APR, or 8.85% with the dealer, a $30,000 car could cost well over $40,000. . While longer loans can be a tool for getting lower monthly payments, the total cost can be easy to overlook.
And yes, you read that right, dealers can mark up a percentage on a loan. It looks like it won’t be long for 96-month terms to become the industry standard.