A 97-month car loan does sound like a good way to have your payments high and low. But it would take a long time before you see a payoff in full, and typically, that amount will be more money than if you had financed for 60 or 120 months. You may not actually save any significant amount of money this way. When your contract is set to expire nearly 8 years from now, the interest charged by the lender will make up the vast majority of your monthly payments. Add in a few fees that are often associated with auto loans over 36 months, and you could be paying about $3,000 after a few years!
When to Сonsider a 97-month Auto Loan?
I really love this question because a longer-term loan can have many benefits, but it’s not something nearly everyone should be doing. You might find you can get a better interest rate on a longer-term auto loan, but the lender may make that up by charging you a higher loan fee or asking for a bigger down payment. A 97-month loan could also limit your options when trading the car in or selling it privately. If you plan to hold onto the car for 7 or eight years, you may find that there is less money in your pocket at the end of that time than if you had listed the car for sale after a more typical 60- to the 72-month auto loan term. If you have found yourself in a predicament where you really need something newer and fashionable, then you are wise to consider a shorter auto loan with slightly higher monthly payments. It gives you more flexibility in trade and resale too! There is simply no reason to go over 3 years unless it’s necessary.
Risks of a 97-month Car Loan
The biggest risk is the lender. You may not know who your lender is until you’ve signed on the dotted line, and by that point, it’s too late! If your lender turns out to be a subprime finance company that allows their borrowers to charge exorbitant rates and fees, you run the risk of getting locked into an auto loan with horrific loan fees that aren’t being paid off anytime soon. So if you’re the type of person who wants to keep their car for a long time, a 97-month loan could work out well for you – but shop around first.
Benefits of a 97-month Car Loan
When your car loan term is 97 months, your monthly payments may be larger, but you will have a shorter auto loan term and significantly lower interest-only for a longer period. It’s a definite win-win situation if you find yourself in a situation where you need reliable transportation more than you need to save money each month on your loan. With a 97-month auto loan, you’ll get the car financed up quickly and get behind the wheel faster, but it will likely mean higher monthly payments than if you had gone with a 60-month loan.
Alternatives to a 97-month Car Loan
Longer auto loans are risky because your interest rate will creep higher and higher over time. Higher monthly payments mean you’ll be repaying more interest than if you had a shorter-term loan, and longer car loans mean your monthly payment will likely be spread across a much longer time! So if you’re considering an auto loan term that’s over 2 years, take a closer look at other financing options and realistic automotive pricing. 97-month auto loans are sometimes a good monthly payment solution for someone with a secure job or outstanding credit score, but I always suggest looking hard for better alternatives.
How to Apply for a 97-month Car Loan?
Obviously, you would fill out the appropriate loan application online or at a dealership, but you should definitely know your credit score going in! Higher credit scores will allow you to take advantage of longer terms with lower monthly payments. If you’re going to go longer on a car loan than a 60-month term, then you’d better have a perfect or near-perfect credit score. And in that case, I would warn against being suckered into subprime financing or predatory lending fees and interest rates – the 97-month loan is not worth it if it means dealing with someone who takes advantage of your dreams for an affordable auto! Be smart, shop around, and do your research first.
What are the Documents Required to Apply for a 97-month Car Loan?
The documents you’d need to apply for a 97-month auto loan would vary by lender. But there are a few possible requirements. Providing proof of income is one thing used during auto-approval. If your loan amount exceeds the borrower’s minimum income amount set by the lender, they may require you to spruce up your financial situation by providing additional financial information such as W2 forms or paystubs. Proof of residency is another thing that may be needed for a 97-month auto loan. This means that along with proof of cash flow, the lender may require you to show one or more of the following:
- utility bill in your name (gas/electric/phone/internet/cable),
- lease agreement,
- vehicle registration,
- signed lease agreement or offer letter.
97-month auto loans are excellent tools for people who regularly use their cars and are more likely to maintain standard driving conditions. Once they have made payments for three years or reached twenty payments total, the loan balance will be forgiven and assumed paid in full absent extraordinary circumstances or the financing company doing an extra “run-out” check. It is easy to see why 97-month financing is so popular since it lets people roll into a new car without a constant stream of monthly payments. It also gives them some flexibility when making payments because the same payment is applied toward the entire principle each month rather than specific segments, like, say, a car payment or general revolving account balance; whatever they can afford goes into their payment, and it rolls over into the future as it is applied to pay down the entire principal amount at once. The length of time needed to pay it off varies greatly depending on speed bumps such as accidents, speeding tickets, and traffic tickets that increase payments due immediately with a late fee.