Car Buyers Opting for Longer Loans, Up to 10 Years
More and more car buyers are opting for stretched car loans, helping lower their monthly payments despite paying more interest over time.
According to J.D. Power and Associates, 30 percent of all financing deals this year have been for six years or longer, with some buyers even opting for 10-year car loans. That figure marks an increase of 23 percent compared to five years ago.
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Over recent years, car loans have been stretching from four or five year loans to six and longer. Automakers have been marketing the longer loans more aggressively, captivating consumers to purchase more expensive models that they normally wouldn’t afford given the monthly payment. “Someone who really has the budget for a Corolla figures if they extend the financing out, they can buy a Camry,” said James Lentz, chief executive of Toyota Motor Corp.’s North American division.
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Of course longer loans do make sense for those that qualify for low interest rates and do the math, especially if they intend to keep their vehicle for a long period of time. Some are investing the difference in their loans to compensate for the additional interest being paid, which could be as little as a few hundred dollars over the life of a loan.
[Source: The Detroit News]
Jason Siu began his career in automotive journalism in 2003 with Modified Magazine, a property previously held by VerticalScope. As the West Coast Editor, he played a pivotal role while also extending his expertise to Modified Luxury & Exotics and Modified Mustangs. Beyond his editorial work, Jason authored two notable Cartech books. His tenure at AutoGuide.com saw him immersed in the daily news cycle, yet his passion for hands-on evaluation led him to focus on testing and product reviews, offering well-rounded recommendations to AutoGuide readers. Currently, as the Content Director for VerticalScope, Jason spearheads the content strategy for an array of online publications, a role that has him at the helm of ensuring quality and consistency across the board.
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