Length of car loans rises, helps fuel sales, according to The Detroit News.
New car and truck loans have ballooned to an average of 5 1/2 years from four to five years not long ago, allowing buyers to afford more expensive vehicles and fulfill their urge to drive the newest thing now.
Auto industry analysts say that longer term auto loans — some for seven years or longer — have helped fuel robust growth in new car sales.
Car shoppers who can afford $320 a month can get into a 2015 Ford Fiesta SE hatchback with 10 percent down on a four-year loan at 1.9 percent. But put 10 percent down on a 2015 Ford Fusion SE and you can get a bigger car for just $358 a month when you finance over six years at 4.9 percent.
But the increasing prevalence of the six-year-plus terms has led some industry observers to question the practice. With a seven-year car note your baby in the back seat will be well into elementary school when the vehicle is paid off.
And while the average car on the road in the U.S. is more than 11 years old and quality is improving, consumer advocates remind buyers to do financial research and weigh options and preferences before signing on the dotted line on a lengthy loan.
Michael Logue, a business operations manager from Castle Rock, Colo., and his daughter Shaylee Smith are using a six-year loan to finance a 2014 Mini Countryman S “with all the bells and whistles.”