In past years, personal and auto loans tended to have four year terms or less. Currently, there are personal loans and automobile loans that will offer you the chance to pay off the loan in seven years. These loans are longer than usual, but they offer a chance to spread the payments out a little bit more. The downside to the 84-month loan is that you end up paying more interest in the long run. Despite the downsides, the loan works for some situations. Here are three ways to determine if an 84-month is worth it.
There is no pre-payment penalty
If you can find a loan that allows you the possibility of pre-payment, an 84-month loan makes sense. When you are cash-strapped, the lower monthly payment makes sense for you. If you get into a better financial position, later on, you can make a large payment on the loan that will take care of the rest of the principle and accrued interest. Have the underwriter of your loan create terms that allow for pre-payment without any penalties for the option down the line.
You need the item for long-term use
If you will be using the item well after the seven-year loan period is up, paying interest for the entire term will be worth it. If the 84-month loan includes work equipment, you will be able to have what you need in order to continually make income. If you are purchasing real estate, you will be able to own the property indefinitely. If you tend to purchase cars and ride in them for twice the term of the loan, an 84-month loan will let you pay small installments for a vehicle that you will use for good.
The interest on the loan is lower
With an 84-month loan and low interest, you will be able to pay off your needs without going too heavily into debt. An 84-month loan with low interest can cost around the same with as a high-interest loan that is a few years shorter. Negotiate a low-interest rate in order to get the best financial deal on your 84-month loan. If you are able to get a low, single-digit interest rate, sign up for a seven-year loan in order to have what you need. Check out the terms that you will be given for your 84-month loan with a loan officer before signing on the dotted line.