What is a 96-month Car Loan?
In the US, you can get a car loan with 3 years of payment (36-month) or 4 years (48-month), but this is too short for some. To get more payment options, you can go to 96 months. You get 5 years of payment with a 96-month car loan. But well, there are some cons. The car loan term is longer. The loan interest grows over the years, and you have to pay more than you initially spent.
When to Consider a 96-month Auto Loan
If a 36-month car loan does not meet your need, you can consider a 96-month car loan. Maintain a pro-active auto loan pay off plan. This can help you save more and, at the same time, prevent overpaying. You can use it for a rough estimate. Still, considering that the interest you pay when you pay off over 96 months is mostly extra (you will need to pay them all eventually), you cannot really convert the monthly payment shown into a monthly payment based on principal and interest only.
Risks of a 96-month Car Loan
It has a longer-term, hence you won’t have easy access to paying off before the term is over. Even if you have good financial stability, you would not be able to refinance your auto loan to take advantage of lower rates or shorter terms. Should it be necessary for the future, you will need to get another auto loan. Banks may require being an existing customer with a high monthly income. It further requires assets such as property and investment.
Benefits of a 96-month Car Loan
The loan term is longer than three years, which means part of the buyers may not qualify for a 96-month auto loan. It also means you get a longer ownership period, which is especially valuable for those who may like to keep transportation until paid off. Also, for those who own the vehicle for a short time to save up for a new one must pay high interest to finance the required monthly payments. So it is good for them to get a longer-term for lower rates. You also need as much as $1000 of monthly income if you want this loan. Which means you are financially stable and have access to $12,000 of cash down payment, or $30,000 in total loan amount (or even more with a co-borrower). Most financial institutions don’t actually require that much down payment, but it’s usually because the interest rate they charge is pretty high that buyers can’t afford. If your car loan has a lower interest rate, you can finance a higher amount to reach the required down payment and begin paying off. Some financial institutions even offer the product with a 0% down payment.
Alternatives to a 96-month Car Loan
There are better options than to get a longer loan term. For those who can be qualified for 96-month auto loans, I advise you to choose it, since the lower interest rate makes a good choice even better. If you cannot be qualified for 96-month auto loans, many financial institutions offer products that can help you finance under normal terms but with 0% down payment. And some financial institutions provide a refinance program for used cars. You just need to put $1000 down payment, and they will refinance your whole loan (even including the original car loan), so once you have paid off 25% of your original car loan, you can refinance it again to put those pay-off amounts into your new car loan. With shallow interest, expensive monthly payments become much more affordable and convenient.
How to Apply for a 96-month Car Loan
Start by finding auto financing providers in your area, then go to their website and apply online. Usually, it’s as easy as submitting your credit scores, financial pieces of information and vehicle valuations. And when your auto loan application has been completed, you will be given a pre-approval with preliminary rates in just seconds.
What are the Documents Required to Apply for a 96-month Car Loan?
- social security number,
- residential address,
- date of birth,
- full-time job info,
- a banking account number (a few are required depending on beneficial use of auto loan),
- salary and routing numbers,
- a (3) primary credit report from Equifax,
- TransUnion and Experian.
And many financial institutions will also need copies of pay stubs or income tax returns. Basically, everything needed to complete your full credit application will be needed when you apply for 96-month car loan. Of course, online applications usually simple with fewer questions than you’ll find in the inquiry line. There’s no harm in asking about what you need to have ready and documents you need to bring.