Are 84 Month Annual Percentage Rate Quotes a Bad Idea?


With Over half a dozen car brands now offer 0% APR for 84 months In response to COVID-19, new car buyers may wonder whether or not a 7 year finance deal is a bad idea. Based on our analysis, the answer may vary based on factors such as your decisions and priorities for owning your next car or truck.

For example, Detroit’s Big Three all offer 84 month interest-free loans, but each offer has its own advantages and disadvantages. The sale of Ford excludes the product range for 2020while both Offer from GM and FCA deal allow you to enjoy rock-bottom prices on many 2019 vehicles, but only a handful of 2020 vehicles. But that’s not all.

In most cases, these are treated as standalone offers that you cannot combine with cashback incentives. For example, the 2020 Chevy Silverado 1500 offers a choice of 0% APR or a discount of $ 6,000. For a $ 50,000 truck, with 0% financing, your cost would be $ 50,000 at $ 595 / month before taxes and fees.

On a 7 year 5% loan, it would cost $ 52,239 at $ 622 per month. On a 5 year 5% loan, it would be $ 49,820 to $ 830 per month. In this case, opting for 0% financing would result in a lower payment. While a shorter loan has a lower total cost, it ends up being $ 235 / month more expensive to pay.

If your goal is to fit a vehicle into your monthly budget, 84 month financing could be a compelling option. But there are risks. For example, a vehicle that looks over $ 200 / month cheaper can tempt you to buy a much more expensive truck and the risk of bumping into it increases negative equity.

As vehicles depreciate over time, some consumers may find that they owe more than the vehicle is worth. As your circumstances change, negative equity can even affect the cost of your next purchase. Many choose to simply factor money from a previous loan towards the cost of a new vehicle.

Even so, there is a lot of potential for buyers who understand the risks. For example, there are a number of vehicles with incentives that make funding a lot easier. In the case of the Hyundai Elantra 2020 currently the cheapest car in america to lease, there is a significant benefit.

With an Elantra SE valued at US $ 20,000, Hyundai offers a choice of US $ 1,000 in cash or 0% APR for 84 months. With the financing, the cost would be $ 20,000 to $ 238 / month. With the discount, a 7-year 5% loan would cost $ 2,558 in interest at $ 269 per month. On a 5 year loan, it would be $ 1,513 in interest at $ 359 / month.

Here, opting for 0% APR would result in lower costs and payments compared to a shorter loan. As a result, we look at the Elantra one of the best April 0% APR. However, because the variables can vary from vehicle to vehicle, buyers need to make sure they do their homework before making a decision.

This is also important to note Many of these offers require prime credit in order to qualify. If you don’t, you will almost certainly encounter higher rates. In this case, Buyers with bad credit or a history of bankruptcy may find it wise Find a new car dealer who specializes in helping people with low credit scores.

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