Before you bite, weigh your options.
Honda now offers an 84-month financing option as a way to draw buyers to the brand, effective April 1, 2022. Honda Financial Services used to offer 72-month financing terms.
A bulletin was sent to dealers by CarsDirect. It stated that the automaker based its decision to offer the longer term on feedback from its dealers. Some car buyers may find the seven-year term attractive if they are looking for lower monthly payments. The flexible financing option has its limitations.
A longer term means higher interest rates which would result in you paying more than the MSRP. CarsDirect discovered that the 84 month financing term is not available with the Standard New Retail Programs. It comes with standard rates that are typically higher than promotional rates.
Rates vary depending on where you live and what your credit rating is. CarsDirect noted that Honda’s Washington published rate is 5.04 percent for an $84-month loan with FICO scores of 760 and above. An additional 1 percent dealer interest rate markup may also be possible.
A credit score of 660-669 can mean an interest rate up to 8.85 percent with dealer markup. A $30,000 loan can easily run into the thousands, and a $40,000 payment over seven years could cost the consumer more than $40,000; this is easy to forget because of the lower monthly costs.
Honda isn’t the only automaker that offers a seven year financing term for its vehicles. Ford, Kia also have this option.
You might consider shopping around to find the best rate if you are in the market for a vehicle.