Buyers Are Purchasing Longer Term Car Loans

Loan terms of six years or longer are becoming common

Jul 26 2013, 12:00pm CDT | by

Buyers Are Purchasing Longer Term Car Loans

According to a recent JD Power survey, the standard length of car loans is on the increase. The survey shows that loans of six years or longer now account for 30% of all new car deals this year. Some buyers have been purchasing cars with loans of up to 72 months with longer-term offset by lower interest rate.

For instance, some Volkswagen buyers been able to get loans of 72 months with 2.64% interest. While 72 months sounds like a long time for car loan, according to JD Power some car buyers are taking out loans of eight to even 10 years.

With 30% of people now taking loans of six years or longer, the number is up 23% from five years ago. The standard length of the car loan was once four years and then crept up to five years. Extended term loans are gaining popularity as cars last longer and have better warranties. Longer-term loans at low interest rates may be good for buyers who plan on keeping the vehicle for a long time. Buyers who offer these longer-term loans and then try to trade within a few years will certainly see the downside.

 
 
 

<a href="/latest_stories/all/all/3" rel="author">Shane McGlaun</a>
Shane is a self described car aficionado. He loves muscle cars, but also knows how green cars work. He has years of experience in testing cars and writes about cars with deeply felt emotions.

 

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