97 Month Loan? No Problem.

After taking several finance courses at DePaul, I have gotten to know what a good deal would be and how to fall into the trap of a salesman.  A woman in Northbrook Illinois recently took out a car loan for 97 months. The reason she said she did this was because she has a child on the way and would like to pay for childcare and keep her payments affordable. As the years have passed and the costs of cars are rising, people need to take out loans that are longer in length in order to be able to afford them. This should interest all students and new car owner because it should make you stop and think, am I really saving money by taking out longer loans? The answer will always be no but not everyone will be able to afford the luxury of paying off a car quickly.


Banks and dealers are really taking a risk by letting consumers take out these long loans. By the time the car is paid back it will be worth so much less to the consumer. Also if the consumer does not pay the loan for example after five years of having the car, the dealership will not receive nearly as much as they should if they have to repossess the car. The women in the article took out the loan for 97 months and the difference in payment per month was only $5. That was fascinating to me because that is less then what an average person spends on lunch.
In our class textbook it talks about strategic approaches to competitive advantages.  Toyota has definitely stood out by making this 97 month loan and will now either force its competitors to lengthen their financing time or lose the business. This long term loan is going to appeal to a vast majority of our population and will therefore bring more business to the car dealerships. Being the first ones out there with this long term loan is going to push that Toyota ahead because the other dealerships will still have to contemplate if this would be the right move for them or if they will in fact be losing out.


Another issue that can arise from taking out a loan for such a long period is that people will keep their cars longer. The turnaround time for a new car is now extended and while the dealerships will be getting in business now they may have to wait longer for returning customers. Think about how often people in your life buy new cars? Will there be a large spike in people purchasing cars? Will this be an affordable option for newly graduated college students or lower income families? We will see.



14 thoughts on “97 Month Loan? No Problem.

  1. Just reading this post shouts out to me deb,debt,debt.. If dealerships are giving out these extended loans just imagined how much the interest rate a person will be paying whenever the 97 months are up. This is ridiculous. I feel if people understood that buying a use car is okay and if you can’t purchase a new car just wait! Down the road you will be grateful that you chose the use car payments over new car payments that you couldn’t afford.

  2. This is a very interesting post as this much time is given by banks and dealers to pay off a car loan. However, as you mentioned, the car’s value will depreciate and the customer will be paying a lot more with the interest than what the car is actually worth or its original value. Also, this could relate to the housing industry collapsing, when people were taking out loans and buying over their budget and eventually going bankrupt.

  3. I find this article disturbing for many reasons. For one, I dont believe someone should buy a car that will take them eight years to pay off and as someone mentioned above, this will most likely lead to a collapse in the car loan market. Another problem I see with this is that the person will be upside down on their loan fairly soon, which may cause some people to just tell the bank to take their car instead of paying more than the car is actually worth, We will have to wait and see how these extended loans turn out, but i believe it wont be a good outcome.

  4. Its odd how Toyota is offering loans for 97 months and I feel that it isn’t necessary. I understand the person is able to keep $5 every month, however it doesn’t even seem worth it to me. In the end she is probably paying more interest. I think car manufactures should stick with the 60 months or maximum of 70 months loans. There will probably be more planned obsolescence in Toyota vehicles when they find lower returning customers in the future.

  5. I believe that on a business perspective, offering 97 month loan is a great idea to attract more customers and create competitive advantage. On other hand, it may have negative consequences in future. As other commenters mentioned, with depreciated car value, people may not pay loan after certain time and company will lose money. But chance of that are less. I think that many people are very careful when it comes to their credit score and not paying loan will have negative effect on their score. So, only few customers, who doesn’t need new loan in short term may do that.

    On customer perspective, I think its not very good idea. Thought of small payments sounds great, but as you reported that Northbrook woman decreased her monthly payment by only $5, it’s not true. Thus, customers will end up paying more money for car in form of interest with almost same monthly payments. Therefore, I don’t think many people, specially recent college graduates, will take 97 month loan. And if some people do, chances of not paying full loan are slim.

  6. Its sad how extreme people tend to get in desperation of any type of “savings”. In reality, we fall for the trap of these loans which we can never pay back, especially young inexperienced and uninformed students. 97 months for a car loan? are they kidding? Does the warranty cover the car for that long? I am sure it won’t. However, Toyota’s probable claim is that their cars last a long time. Therefore, it will be a good decision to purchase a car with a eight year loan. I would say that research other options, because it is definitely not worth it in the long run.

  7. Call me crazy, but I beg to differ on this. I believe it’s actually a good thing for consumers because if you get your payments down so low, you may actually be able to double down or at least pay more than the required, and soon the interest that your expected to pay on it decreases. If you can’t pay more, than you have the ability to drive a nice car and not a p.o.s your whole life. Consumers shouldn’t be scared to walk into a dealership or even the car shows because they feel like it’s not in their price range. The average age of vehicles on the road is at or near 10 years old, so an 8-year loan is perfect. Also the way cars are made today, they actually depreciate less and the used car is actually more valuable, making it easier to resell nearing the end of the loan or after.

  8. I agree with tkrolicki, some people will probably rather have the bank take the car rather than pay more than what the car is worth, just like what some people were forced to do with their homes after the market collapse. People will only be able to keep their cars or houses for as long as they keep paying back their loans. If people can’t even pay a 36 month loan, how are they expected to pay off a 97 month one? That’s almost three times longer than regular loans! Is it really worth it in the end? Sometimes I feel like these types of things are just prolonging the amount of time it would take for the consumer to call it quits, where the longer the amount of time of the loan, the less and less likely the consumer will be able to afford paying it off. So much can happen within those eight years that can affect whether you can keep paying. In the end, is it really about the consumer? The bank will get their money somehow, car or no car.

  9. I think this isn’t such a smart thing for the buyer to do. They end up paying so much more for the car due to interest rates raising and such. It’s not a smart move especially because the mentioned difference for a shorter loan was only $5. Also if someone can’t afford a new car with the new rates and paying for education maybe they shouluy a used car instead and save up till tey can afford a new car. In the long run it’ll be a better investment and they could pay for the car without having to take out such a long loan. I don’t think other car manufactures should follow in their footsteps and I don’t think many will. The 97 month loan doesn’t seem like it’ll be appealing to all.

  10. you’re talking about paying for a car for 8 years and depreciating into probably zero, so that is crazy. Interest will surpass the actual value of the car. I guess as long as you’re rolling in style right? By the time you give them all that interest, you could of have a Aston Martin or something higher end.

  11. 97 Month Loan? No Problem

    This has been in a current issue in the United States for the last couple of years. A person can purchase an item, without having enough money at the moment. The housing market collapsed for the same reason. People thinking they can buy a house with zero down payments and then not able to meetup with the demand to actually pay for their house. In this case when it comes to a car with a 97 month loan period, it is not an asset you are investing in. By the time 8 years pass the value of the car will be nothing because the people using this plan will not be buying an expensive car to begin with. Unlike houses, car value drops. I understand some people dont have enough economically, so they will favor this deal, but is it worth it in the long run? A high downpayment can change everything and I believe saving money for that is a better idea.

  12. This article, like many other things, has both a positive and negative aspect to it. The positive side of this article includes consumers being able to purchase a more expensive type car and be able to maintain it properly. The downside to this article is for the manufacturers who will have to wait a maximum of about seven years for some consumers to pay off their loans fully. If everyone decides to buy a vehicle from one dealership, the dealership will ultimately go broke. I think that this is unfair to the dealers because their business will be harmed the most.

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