97-month car loan: Some car sellers are offering 97-month loans for new vehicle, allowing customers to make monthly payments.
These increasingly longer loans might be the norm in the future, according to a report from the Wall Street Journal.
Last year, the average term for a new car deal increased to 65 months, which is the longest ever, according to Reuters, citing Experian Information Solutions Inc. That was up from 63 months in 2011. For loans on used cars, the average term did not change at 60 months.
The firm said that 17 percent of new car loans were between 73 and 84 months, and some went as high as 97 months, or more than eight years, reported the Journal.
This comes also as the average price of a new car has raise $3,000 to $31,000 in the past four years.
The Journal reported that automakers are conflicted over the long loans.
On one hand, they allow people to buy more cars at a higher price but on the other hand, the loans might prevent people from replacing their vehicles because they are still paying them off.
“Generally, the current economic and consumer environment is more favorable for longer terms as compared with prior periods,” Ally Bank, the biggest car financer in the United States, told the paper.
The firm added that the American “used vehicle market remains strong, current vehicle quality also helps to maintain appropriate values, and consumer credit profiles are improving,”