Extended auto financing becomes more popular
Posted on Friday, July 12, 2013 at 2:59:34 PM
Conventional wisdom says the standard length of a car loan is four or five years, but new research reports a record number people auto financing for longer periods of time.
A recent study by J.D. Power and Associates shows that more people are taking out car loans that are upwards of six years, in some cases even as long as 10 years. A Los Angeles Times article states that extended loans like these make up 30 percent of all auto financing in 2013, which is a 23 percent increase over the past five years.
This loan trend is mostly due to the benefits it provides car buyers. Scott Greenberg, a technology consultant, chose a 72 month loan, with a miniscule interest rate of 2.64 percent. His monthly car payments are close to $100 less than with traditional automotive financing.
More Americans are choosing Ford, according to MarketWatch. The car company had sold more than 1 million vehicles through May, with total sales up 13.9 percent. Coming in close behind were Toyota and Honda, both selling over half a million cars in the first five months of 2013.
Moreover, the improved condition of new vehicles has them lasting longer, making a greater commitment less of a concern for buyers, the Los Angeles Times said. It also provides the opportunity to purchase a more expensive model.