Long Term car LoansLong-term car loans
At the same rate, however, the median car rental rate rose from $465 per month to $460 per month due to longer credit periods and lower interest rate levels. During the last trimester of 2012, the mean life of a new license was 65 month, the longest ever, according to Experian Information Solutions Inc.
As Experian said, 17% of all new car loans in the last trimester were between 73 and 84 month and there were even a few as long as 97 month. Only 11% of loans four years ago were in this group. You' ve been reading that right, 97 mounths - that's eight years and changes.
History says that most qualifying for these longer loans have good ratings and usually buy more cars. Those long car loans seem to be good for new car purchasers because they help keep payment low, preferably below $500 a months. But, as the history tells, it will take much longer for shoppers to get to the point where they have less to pay the car than it is actually worth. What's more, they don't even pay the car back.
WSJ Stück even names loans longer than 72 month "subprime loans", which is not at all reassuring given how these loans in the residential property sector have beaten our economies. However, this is not possible for many purchasers - I would even go so far as to say most purchasers - so sometimes funding is necessary.
Even if you do it right and with a low interest rates, the funding can be advantageous for your soundness. WSJ history concludes with a very interesting comment on how far car funding has progressed since the 1950s: Loan lengths have come a long way since Lee Iacocca, then a Ford region executive, pioneered car loans in the fifties.
Loans were repaid in only 36-month time. How do you feel about these super-long car loans? Is it good or poor for the buyer and the business?