Auto Loan Tips

8-Year Car Loan?

7-year or 84-month auto loan is already a rarity, but smart people in car dealerships and banks are now inventing 8-year or 96-month auto loans. Surely, it is not a good idea to commit your payment for the next 8 years while your new set of wheels will not accompany you this long.

Now the auto industry is rolling out a tempting new bait to boost molasses-paced new car and truck sales — an eight-year auto loan.

"That's a good way to do that," says Debbie Guthrie of Fort Worth, Texas, an SUV aficionada who recently bought her latest vehicle. She says she'd consider a 96-month note as a way to upgrade: "Now I [could] buy a Lexus or something and then you're not going to get upside-down in it."

Being "upside-down" is industry parlance meaning to exceed a lease plan's mileage allotment before the end of the term or owing a considerable amount of money on a purchased car at trade-in time.

While extra-long loan programs and their promise of lower monthly payments are meant to generate foot traffic through the doors of showrooms across the country, some dealers are skeptical.

"That might bring them in today and tomorrow, but in the long run, it hurts us," says Mike Mason, general sales manager of the Arlington [Texas] Auto Mall, which offers several name plates under one roof.

He calls the 96-month note an unwise way for automakers to boost short-term business because, "these people [car buyers] are out of the market for more years. If we take the people out of the market for five years, a lot of things can happen. The loyalty to the dealer and their brand diminishes," he says.