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Auto Loan Crisis: Is Your 84-Month Car Loan a Financial Trap?

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The 84-Month Car Loan Trap: Why Record Delinquencies Signal a Buyer-Beware Market

With auto loan delinquencies at an all-time high, lenders are still pushing longer terms on both new and used cars. Here's what you need to know to avoid a financial pitfall.

Video by CarEdge, a consumer advocacy channel focused on car buying and ownership.

4 key moments5 takeaways

Key Moments

Carvia Insight

The Danger of Financing Older Cars

Carvia InsightFinancing a 5+ year-old car for 72 or 84 months is a recipe for disaster. You're almost guaranteed to face a major, out-of-warranty repair bill while you're still making payments, putting you in a tough financial spot.

The "Monthly Payment" Mind Game

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Carvia InsightDealers love when you focus only on the monthly payment. It allows them to stretch the loan term and inflate the interest rate without you noticing. **Always negotiate the vehicle's total out-the-door price first.**

Lenders Are Bracing for Defaults

Carvia InsightWhen a major lender like Capital One dramatically increases its 'loan loss provisions,' it's a clear signal they expect more people to default. This risk is passed on to you through higher interest rates, especially if you have subprime credit.

The Problem with Low Down Payments

Carvia InsightPutting less money down might feel easier upfront, but it means you're financing more of a depreciating asset. This makes it very easy to become 'underwater' on your loan—owing more than the car is worth—from day one.

Carvia Takeaways

Carvia Insight

**Avoid any loan term longer than 60 months, especially on a used car.** The risk of a major repair bill on top of your monthly payment is simply too high.

**Never shop by monthly payment.** Tell the dealer your target 'out-the-door' price. Focusing on the payment is the easiest way to get a bad deal.

**High lender 'loan loss provisions' are a red flag for you.** It means they expect defaults and are charging higher interest rates to cover those potential losses.

**A small down payment is a big risk.** Aim for at least 20% down on a new car (10-15% on used) to build instant equity and protect yourself from depreciation.

**Research the total cost of ownership, not just the sticker price.** Factor in insurance, fuel, and potential repair costs for the specific model you're considering before you sign.

Model-Year Watchouts

Carvia Insight

Older Used Vehicles (5+ years old) (Pre-2020)

Watchouts

Financing an older, out-of-warranty car for 60+ months is a financial trap. A major component failure (engine, transmission) could happen while you still owe thousands.
Subprime lenders often target buyers for these vehicles with APRs exceeding 20%, making the total cost of the car astronomical over the life of the loan.

History to Verify

Demand a full vehicle history report to check for accident history, title issues, and maintenance gaps. A clean report is non-negotiable.
Look for consistent service records. A lack of regular oil changes is a major red flag for long-term engine health.

Pre-Purchase Checks

An independent pre-purchase inspection (PPI) is your best defense. A trusted mechanic can uncover hidden rust, pending mechanical failures, or previous poor-quality repairs.

How to Verify in a Carvia Report

Title brands and ownership history
Odometer readings over time
Accident chronology and damage reports
Service intervals and maintenance records

Check this VIN with a Carvia report

More Guides

Not sure what to look for? Our report flags title issues, mileage anomalies, prior damage, and more—before you buy.

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Topics & Tags

Auto FinanceCar BuyingUsed CarsSubprime LoansEconomic TrendsCapital OneAlly FinancialExperianCox Automotive

Carvia.ai is not affiliated with the creator of this video. The analysis and guidance provided are our own, based on our mission to empower car buyers.

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