With auto loan delinquencies hitting record highs, lenders are offering longer terms than ever. Here’s why that 84-month loan on a used car could be a financial disaster waiting to happen.
Carvia InsightCarvia InsightFinancing an older used car for 72 or 84 months is becoming common, but it's a huge red flag. You're almost guaranteed to face a major, out-of-pocket repair bill long before the car is paid off, putting you in a tough financial spot.
Carvia InsightFor buyers with less-than-perfect credit, lenders are charging average interest rates over 22%. This isn't just expensive; it dramatically inflates the total cost of the car and makes it nearly impossible to build equity.
Carvia InsightMajor lenders like Capital One are setting aside billions for expected loan losses. This is a clear signal that the loans being written today are incredibly risky. If the bank is worried, you should be too.
Carvia InsightAs down payments shrink, buyers start their loans with more negative equity ('upside down'). Combined with a long term, this means you'll owe more than the car is worth for years, trapping you in the vehicle.
Carvia Insight**Never finance a used car for more than 48-60 months.** Anything longer invites a collision between your loan payments and major repair bills.
**Focus on the total cost, not the monthly payment.** A low payment stretched over 84 months can cost you thousands more in interest. Use a loan calculator to see the real price.
**A 20% down payment is your best defense.** It creates an immediate equity buffer and protects you from being upside down the moment you drive off the lot.
Carvia InsightCarvia.ai is not affiliated with or endorsed by the video creator. The analysis and insights are generated by our editorial engine to provide additional context for car shoppers.
**Your total car costs should be under 15% of your take-home pay.** This includes the payment, insurance, fuel, and estimated maintenance. Don't let a single purchase sink your budget.
**If you have subprime credit, pause your purchase.** Work on improving your credit score or save up for a reliable cash car to avoid predatory interest rates that make ownership unsustainable.