As of April 1, 2022, Honda has started offering an 84-month financing option to attract buyers to the brand. Previously, the longest financing term that customers can avail from Honda Financial Services was 72 months.
According to a bulletin sent to dealers, obtained by CarsDirect, the automaker said that the decision to offer the longer financing term is based on feedback from its network of dealers. The seven-year financing term can be attractive to some car buyers who are looking to purchase a Honda with lower monthly payments. However, the flexible financing option is not without a drawback.
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Naturally, a longer financing term would mean higher interest rates, which means you'd be paying a lot more over the MSRP. CarsDirect also discovered that the 84-month financing term is only available with what Honda calls the Standard New Retail Programs. This means that it comes with standard rates that are traditionally higher than promotional ones.
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The interest rates vary per region and the buyer's credit rating. But as CarsDirect pointed out, Honda's published rate in Washington is 5.04 percent for an 84-month loan with a FICO score of 760 or more. A possible 1 percent dealer interest rate markup can also be added on top.
In worst cases, a credit score of 660 to 669 could mean an interest rate of up to 8.85 percent (with dealer markup). A $30,000 can easily cost a consumer over $40,000 over seven years, which is something that's easy to overlook because of the lower monthly payments.
If you're in the market for a car and you find this longer financing option attractive, you might want to shop around and find the best rate for you.