Longer auto loans mean more vehicle options for borrowers
Posted on Monday, August 19, 2013 at 11:45:05 AM
Thanks to a general shift in automotive financing, more people are using five-year loans than any other length, opening up more expensive vehicle choices for buyers.
In previous years, getting a loan over five years was rare because shorter lengths were more of the industry standard, according to the Salt Lake Tribune. That was most likely related to higher interest rates, but now the friendlier lending environment is letting people finance for longer.
Ronald Montoya, consumer advice editor for Edmunds.com, told the news source that four-year loans are exceedingly unusual, and consumers are more interested in lower monthly payments and affordable auto financing.
However, the length of the loan makes more of a difference than just the payment amount. For example, after five, six or seven years, the vehicle may not have a great resale value, the news source noted. Shorter loans leave more options for buyers in this regard.
In addition, one potential vehicle choice that had recently taken a hit is the pickup truck, according to MiBiz. Economic constraints may have turned people away from gas-guzzling options such as these, but Citi Investment Research and Analysis director Itay Michaeli believes this isn't true.
Michaeli stated during an industry seminar that the truck market is ready for a great performance in the coming months, MiBiz noted. The auto market as a whole is predicted to do well, including pickup trucks.