A 97-month auto loan? You've got to be kidding me

hand holding toy car over a piggy bank

Eight years and one month.

That's the equivalent of your high school and college undergraduate years combined. Plus an extra month for good measure.

Ninety-seven months is also the amount of time it will take you to pay off this new, super-long auto loan some banks are hawking.

This loan is more than twice as long as our Car Affordability Study recommends.

I'm going to make this as clear as possible: A 97-month car loan is ridiculous and borders on predatory lending.

Lenders say they're making long loans because they want to keep payments under $500 a month. But this just takes a dirty auto lending trick — extending the payments until they look affordable — to an absurd level.

And the loser?

Of course, it's the person taking out the loan, who will pay eight years of interest to the winners in this scenario — the banks.

Chart showing 2012 auto loan trendsHere's an example using the average car loan rate: 4.12%, according to our most recent survey.

Finance a $20,000 vehicle purchase over 48 months, and you'll pay $1,728 in interest, according to our auto loan calculator. Finance the same amount for 97 months, and your interest payments jump to $3,549 — a whopping 105% difference.

Indeed, longer loans are growing more common.

Experian Information Solutions data show that 17% of all new-car loans in the first three months of 2013 were between 73 and 84 months long, according to The Wall Street Journal, which noted the data showed "a few as long as 97 months."

In fact, the average loan term for a new car is 65 months, according to Experian.

Sixty-five months is bad enough, but there is absolutely no reason to take out a 97-month loan.

And we don't buy the line that cars are being made better and last longer, either. That's no validation for racking up that kind of interest on what is a depreciating asset.

Plus, it'll be harder for these borrowers to sell the car if they need to without losing their shirts in the process, because they're just underwater on their cars for too long.

We know that cars are getting more expensive (Americans spent more than $30,000 last year, on average, for a new car or truck.) and that wages are stagnant, but long car loans are wealth killers.

The 20/4/10 rule says you should make a down payment of at least 20% when you purchase a vehicle, finance it for no more than four years and not let your total monthly vehicle expense, including insurance, exceed 10% of your gross income.

If you can't afford a car with four years of payment, you shouldn't buy that car.

There's nothing wrong with going used.

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