The American dream has long included car ownership—a symbol of freedom, mobility, and financial stability. But as inflation soars, wages stagnate, and vehicle prices skyrocket, many consumers are turning to extreme financing options just to get behind the wheel. Enter the 96-month car loan—an eight-year commitment that signals desperation rather than financial prudence.
Car prices have surged in recent years, with the average new vehicle now costing over $48,000. Meanwhile, interest rates have climbed, making traditional 36- or 60-month loans unaffordable for many. Lenders, eager to keep sales flowing, have stretched repayment terms to 84, 96, or even 108 months.
At first glance, these loans seem like a lifeline—lower monthly payments mean buyers can "afford" a nicer car. But dig deeper, and the risks become glaringly obvious.
Extending a loan term reduces monthly payments but dramatically increases total interest paid. A $35,000 car at 7% APR over 96 months costs nearly $12,000 in interest alone. By comparison, a 60-month loan at the same rate would accrue only about $6,500 in interest.
Worse, most cars depreciate faster than the loan balance decreases. This creates negative equity—owing more than the car is worth—trapping borrowers in a cycle of debt if they need to sell or trade in the vehicle early.
Ultra-long loans didn’t exist in mass numbers before the 2008 financial crisis. Their prevalence today reflects deeper economic issues:
When 8-year loans become "normal," it’s not innovation—it’s a symptom of systemic failure.
Committing to a car payment for nearly a decade is mentally exhausting. Life circumstances change—job loss, medical emergencies, or simply wanting a newer model can leave borrowers stuck. Unlike a mortgage, a car is a depreciating asset, making the long-term commitment even riskier.
Longer loans mean:
The average car loan term has ballooned to 72 months, and 96-month loans are creeping into the mainstream. But this isn’t progress—it’s exploitation.
The sweet spot for value is often a 2- to 3-year-old used car, which has already taken the steepest depreciation hit. Saving up and paying cash eliminates interest entirely.
Leasing isn’t perfect, but it avoids long-term debt traps. Just be mindful of mileage limits and fees.
If a 96-month loan is the only way to "afford" a car, you’re shopping outside your budget. Opt for a more affordable model or delay the purchase until you can secure better terms.
96-month car loans are a last resort—a desperate move in an economy that’s squeezing the middle class. While they may offer short-term relief, they’re a long-term financial disaster waiting to happen. Before signing, ask yourself: Is this car worth a decade of debt?
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Author: Loans App
Link: https://loansapp.github.io/blog/why-96month-car-loans-are-a-lastditch-effort-4586.htm
Source: Loans App
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