Honda's 84-Month Loans: Is It Worth It?

Honda buyers have several financing options to choose from when purchasing a new or used vehicle. While Honda traditionally offers more conservative incentives than other brands, it introduced 0% financing deals for the first time in 2021. Honda Financial Services (HFS) offers competitive financing rates on new and certified pre-owned vehicles, with options for debt protection and special offers for recent graduates and military members. Auto loans typically range from 36 to 84 months, with Honda usually limiting consumers to a 72-month term.

Honda Financial Services offers competitive financing rates on new and pre-owned vehicles

Honda Financial Services, also known as the American Honda Finance Corporation, does not have an app. However, you can make payments and access information about your loan on their website. Honda interest rates depend on several factors, including the car model, your credit score, and the length of your loan term. Local dealerships often offer special financing deals, so the interest rate may also depend on where you live.

Honda offers two levels of certification for its pre-owned vehicles: HondaTrue Certified and HondaTrue Used. Both levels come with limited warranties, roadside assistance, and complimentary oil changes. All HondaTrue cars undergo a rigorous 182-point inspection and are reconditioned to manufacturer standards before being sold.

While Honda typically limits consumers to a 72-month term, your local dealer may have in-house financing relationships with banks that enable them to offer extended loan options. It's always a good idea to keep an eye out for promotional sales events, as Honda Financial Services may offer special financing on specific models during these periods.

Auto loans typically range from 36 to 84 months

The benefit of a short car loan term is that you'll end up paying less interest overall. Short-term loans typically have better interest rates, and the shorter term means there is less time for interest to accrue. This could mean saving thousands on the total cost of the car once it's paid off. There is also substantially lower risk associated with shorter car loan terms. Vehicles depreciate over time, so with a shorter loan term, you're less likely to end up owing more than your car is worth. Finally, shorter loan terms mean you'll be out of debt sooner, and you'll be able to drive your vehicle for longer without having to worry about making monthly payments.

However, longer-term auto loans, such as those ranging from 72 to 84 months, have become increasingly common due to rising car prices and interest rates. These longer-term loans can make monthly payments more affordable for buyers. For example, a 72-month loan is more affordable than a 60-month loan because the payments are stretched out over a longer period. As a result, longer-term loans are becoming more popular, and we may see an increase in 84-month loans in the future as buyers seek to lower their monthly payments.

While Honda traditionally offers more conservative incentives than other brands, it introduced 0% financing deals for the first time in 2021. Honda typically limits consumers to a 72-month term for auto loans, but some dealers may offer 84-month loans through in-house financing or relationships with banks. It's important to note that extended-term financing options may come with higher non-promotional interest rates, and the rates can vary by region and depend on the consumer's credit score.

Honda FCU provides optional debt protection on consumer loans

Honda FCU provides optional debt protection on all consumer loans, including vehicle, personal, and credit card loans. This debt protection offers peace of mind by covering loan payments in the event of disability, injury, illness, involuntary unemployment, or death. It is important to note that Honda FCU does not offer debt protection on real estate products.

The Debt Protection Program is entirely optional and will not impact the terms of any credit agreement or the application process for a loan. Certain eligibility requirements, conditions, and exclusions may apply, and interested individuals are advised to consult their loan representative or refer to the Member Agreement for a comprehensive understanding of the program's terms.

The Debt Protection Program can be cancelled at any time, and if cancelled within 30 days of purchase, a full refund of any fees paid will be provided. The program is administered by CUNA Mutual Insurance Agency, Inc., and the credit life and credit disability insurance products are underwritten by CMFG Life Insurance Company.

Honda FCU offers a range of financial services, including vehicle loans for new and used cars, unsecured personal loans, and credit cards with rewards and low rates. They also provide competitive refinancing options for those who are unhappy with their current loan terms.

Borrowers with excellent credit scores often choose shorter loan terms

Honda does offer 84-month financing, but it is harder to find than you may think. The automaker usually restricts consumers to a 72-month term, and 84-month loans are only available with what the company calls Standard New Retail Programs. These are non-promotional interest rates and can be much higher than advertised rates. While these interest rates can vary by region and depend on a consumer's credit score, an 84-month loan could be costly. For example, based on Honda's published rates in Washington, an 84-month loan with a FICO score of 760 or higher is listed at 5.04%, with a potential dealer interest rate markup of up to 1%.

Lenders consider a FICO score of at least 670 to be a good to excellent credit score. However, the minimum credit score requirements vary among lenders, with some considering anything below 620 to be bad credit. Individuals with a bad credit score may find lower secured loan rates and terms if they have a home or car as collateral. Additionally, borrowers with strong work histories and education but poor credit may benefit from loans that offer shorter terms and require lower minimum credit scores.

When considering a loan, it is essential to compare different loan options and lenders to find the best interest rate and payment terms for your needs. Borrowers should also be cautious of loans with features that could surprise them in the future, such as prepayment penalties, balloon payments, negative amortization, or interest-only structures. It is recommended to ask the lender for a Loan Estimate to understand the total cost of the loan better and make an informed decision.

Honda introduced 0% financing deals and rebates in 2021

In 2021, Honda introduced 0% financing deals and rebates for the first time. This was a significant change for the brand, as Honda's incentives have traditionally been more conservative than those of other car brands. The 0% financing deals were introduced amid high car prices caused by a chip shortage, and they were available for 84 months. While this may be appealing to some, it is worth noting that Honda's extended-term financing is only available through what the company calls Standard New Retail Programs. Standard rates are non-promotional interest rates and can be higher than advertised rates. These rates can vary by region and depend on a consumer's credit score. For example, an 84-month loan with a FICO score of 760 or higher is listed at 5.04% according to Honda's published rates in Washington, with a potential dealer interest rate markup of up to 1%.

While Honda did introduce 0% financing deals in 2021, it is important to understand the potential limitations and costs associated with their extended-term financing options. The automaker typically limits consumers to a 72-month term, and their incentives change frequently. Honda's lowest 72-month interest rate as of April 2022 was 1.9% APR. It is always a good idea to compare offers from different dealers and consider the total cost of the loan, not just the monthly payments.

Additionally, it is worth noting that local dealers may have in-house financing relationships with banks that enable them to offer options that are not available through Honda's captive financing arm, Honda Financial Services (HFS). Therefore, it is recommended to explore different financing options and consider the specific terms and conditions before making a decision.

In summary, while Honda did introduce 0% financing deals and rebates in 2021, the availability of 84-month financing may vary, and it is important to carefully review the terms and conditions to make an informed decision.

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