Honda Is Now Offering 84-Month Financing

Honda has bowed to pressure and introduced 84-month financing in line with its competitors. According to a bulletin sent to dealers, the company is now offering 7-year financing on its lineup starting today. The move may enable more buyers to afford the brand's new cars but could come with some major drawbacks.

Before today, Honda Financial Services didn't have an 84-month option and the maximum term was 72 months. However, as of April 1st, the automaker is offering buyers additional flexibility with financing terms of 73 to as long as 84 months. Honda says the change was based on feedback from its network of dealers.

Honda incentives have traditionally been more conservative than other brands, though we've seen significant changes over the past year. In 2021, the brand introduced rebates as well as 0% financing deals for the first time. With high car prices amid a chip shortage, 84-month loans may be appealing to some.

But is Honda's 84-month financing offer really a good deal? A closer look finds that extended-term financing is only available with what the company calls Standard New Retail Programs. Standard rates are actually non-promotional interest rates and can be quite a bit higher than what you see advertised on TV and online.

While these interest rates can vary by region and depend heavily on a consumer's credit score, an 84-month loan could be costly. Based on the brand's published rates in Washington, for example, an 84-month loan with a FICO score of 760 or more is listed at 5.04%, with a potential dealer interest rate markup of up to 1%.

The worst credit Honda will finance for 84 months is so-called Tier 8, or a credit score of 660 to 669. However, with a rate of 7.85% APR, or 8.85% with dealer markup, a $30,000 car could cost well over $40,000. Although longer loans can be a tool to score lower monthly payments, the total cost can be easy to overlook.

To be fair, many major brands offer 84-month financing at promotional and standard rates. For example, Ford has an 84-month rate of 5.9% APR on the F-150 pickup, while Kia has rates as low as 3.9% on the Stinger. We recommend considering the pros & cons of a 7-year auto loan based on your unique situation.

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