Honda Warns Consumers Over Nissan's "Stupid" Push Of 84 Month Car Loans

A top U.S. executive at Honda Motor Co. said competitors are doing “stupid things” to boost auto sales, including making seven-year-long car loans that harm buyers.

Automakers are increasingly selling vehicles with 84-month loans that reduce monthly payments while making it tougher to repay faster than cars lose value, John Mendel, Honda’s U.S. sales chief, said in an interview. The Tokyo-based company will avoid longer-term loans even as Nissan Motor Co. tries to supplant it as the fifth-biggest automaker in the U.S., he said.

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TheSteve - 1/21/2015 11:23:53 AM

+1 Boost

It depends. If you keep your car for less than 7 years, having a 7 year car loan means you'll have a surprise balloon payment at the end. If you keep your car for 7 years or more, then having a 7 year car loan will improve your cash flow, which you could use to invest in a higher-yield financial vehicle than the loan cost, and come out ahead.

Perhaps Honda's senior exec doesn't like the competition's 7 year car loan because it encourages an owner to keep their car for 7 or more years rather than possibly shopping for a Honda.

bw5011 - 1/21/2015 10:54:24 PM

+1 Boost

What position did you play in college?

Need4Speed - 1/21/2015 12:03:23 PM

+1 Boost

Seriously...if you need a 7 year car loan to purchase a vehicle, your cash flow needs to be improved a lot more than you think and you would be better served if you passed on it altogether. Let's face it.. these loans are for people who are already indebted or should be looking at cheaper alternatives to begin with. Anyone with the mindset to "invest for higher-yield" would know better than to get trapped in a 7 year financial agreement where 80 - 85% of the assets value will depreciate before you complete paying for it. Nevermind the fact that after you add up all the payments you could have bought two vehicles for that price when paid upfront. Seems like the only winner here is Nissan.

610looper - 1/21/2015 4:49:20 PM

+1 Boost

Let's see, your warranty ends after 3yrs/36,000 miles, what will your resale value be after 6yrs and 11 months? Look at the safety advancements we've had in the last 7yrs, rise in reliability, ruel efficiency. Is there a 7 yr old Altima or Maxima, perhaps a Versa that you fancy? People should just buy used and within their financial limit.

MDarringer - 1/21/2015 8:09:06 PM

0 Boost

A 60 month loan is about as far as a person should go. 72 months is stupid. 84 months is asinine.

I say never take out a loan for more than the warranty interval.