A 97 Month Car Loan Is Ridiculous

Buying a car has always been an expensive proposition. Auto loans are often the second biggest expense that an individual has after buying a home. Despite an economy that has seen housing prices decline and wages stagnate, automobile prices have continued to rise. In order to deal with the rising prices of automobiles, lending institutions have been extended loan terms longer and longer. According to the Wall Street Journal, loan terms have hit a new record.

I found it ridiculous when car dealers started offering 7 year loans. Now, automobile companies are now offering auto loans that extend up to 97 months. That’s more than eight years to pay off an auto loans.

When I bought my first car, I made the mistake of signing up for an auto loan that lasted for 72 months. While I enjoyed the fact that it kept my payments in the $400 range, it also kept me making payments for nearly six years. The only reason that my loan did not last the whole six year time frame is because I paid it off early. I learned a valuable lesson from that experience. Never finance an automobile for over five years. There are simply too many drawbacks.

1. You will wind up paying a higher interest rate.

Banks and automobile finance companies charge you more in interest the longer your loan term goes. It is known as the time value of money. Lending you a $1 today may mean paying back $1.25 or $1.50 tomorrow.

2. You will keep making car payments longer.

The risk of default increases the longer that your loan term is. You never know what financial hardship may come upon you with a 6,7, or 8 year loan. You are also more likely to wind up having to pay for automobile repairs while making car payments at the same time. You just may wind up making payments for years on a car that has died on you.

3. You should never take on a long-term loan for a car.

A car is an asset that depreciates in value. It will not gain value unless you plan on parking it, protecting it, and waiting 30 years for it to become a classic. If it takes you longer than five years to pay off your car loan, then you have spent too much for your car. Live within your budget. You should never purchase a car that you can afford. A 7 or 8 year car loan is a clear sign that your wants are bigger than your wallet.


Prepare yourself. A 10 year loan is right around the corner!


  1. Your point about depreciation is a great one, Mark. We need to be realistic about our financial constraints, especially when it comes to a purchase as big as a car.

  2. I haven’t visited your blog in a while Mark, but this topic is a good one. I see it often, people spending so much money on fancy cars, but barely can afford to put food on the table. I’m going to profile this article on my blog this week.

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