96-Month Auto Loans: The Fine Print You Need to Read

The auto industry is undergoing massive changes, from the rise of electric vehicles (EVs) to skyrocketing car prices. Amid these shifts, one trend has quietly gained traction: the 96-month auto loan. That’s right—eight years of monthly payments for a depreciating asset. While the idea of lower monthly payments might sound appealing, the fine print reveals risks that could leave buyers in financial trouble.

Why 96-Month Loans Are Becoming More Common

Rising Vehicle Costs

The average price of a new car in the U.S. has surged past $48,000, pushing many buyers toward longer loan terms just to afford monthly payments. With inflation driving up costs across the board, consumers are stretching budgets thin—and lenders are happy to oblige.

Lender Incentives

Banks and credit unions are increasingly offering extended loan terms to attract buyers who might otherwise walk away from a purchase. A 96-month loan reduces the monthly payment, making expensive vehicles seem more affordable—at least on paper.

The Psychological Trap

Lower payments create the illusion of affordability. Buyers focus on the short-term relief rather than the long-term cost. But as we’ll see, this can lead to serious financial consequences.

The Hidden Risks of 96-Month Auto Loans

Negative Equity: The Silent Killer

One of the biggest dangers of an eight-year loan is negative equity—owing more on the car than it’s worth. Vehicles depreciate rapidly, often losing 20-30% of their value in the first year. With a 96-month loan, you could be underwater for years, making it difficult to sell or trade in the car without rolling debt into a new loan.

Higher Interest Costs

Stretching out a loan means paying more in interest over time. Even with a relatively low APR, the total interest paid on a 96-month loan can add thousands to the cost of the car.

Maintenance and Warranty Concerns

Most factory warranties expire after 3-5 years. If you’re still paying off the car when major repairs arise, you could be stuck with hefty bills on top of your loan payment.

Who Should (and Shouldn’t) Consider a 96-Month Loan

When It Might Make Sense

• High-income buyers who want to free up cash flow for investments.
• Business owners who can write off interest expenses.
• Those with ultra-low APR offers (though these are rare for long terms).

When It’s a Bad Idea

• Buyers with tight budgets—if you can’t afford a 60-month loan, you probably can’t afford the car.
• People who change cars frequently—you’ll be trapped in negative equity.
• Anyone prioritizing short-term savings over long-term costs.

Alternatives to a 96-Month Loan

Leasing

If you like driving new cars every few years, leasing might be a smarter option. You avoid long-term debt and negative equity traps.

Buying Used

A lightly used car can save you thousands upfront—and you won’t need an eight-year loan to afford it.

Shorter Loan Terms

A 48- or 60-month loan forces you into a more disciplined payment plan and reduces total interest paid.

The Bottom Line: Read the Fine Print

Before signing for a 96-month loan, ask yourself:
- Will I still want this car in eight years?
- Can I handle repair costs after the warranty expires?
- What’s the total interest I’ll pay compared to a shorter loan?

The auto market is evolving, but one rule remains timeless: Debt should work for you, not against you. Stretching payments to the extreme might solve a short-term problem—but it often creates a long-term financial headache.