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Auto Loan
Terms Get Longer
With all the
talk of subprime mortgage loans and people
not being able to pay, you would think
that the auto loan business would be
playing it a little safer. Instead, they
are actually offering more auto loans to
more people who probably cannot afford
them. They are simply making the terms
seem more attractive.
The more people get into trouble, the more
months that auto loan people are offering
their buyers. For people who may not be
able to afford an auto loan for three or
four years, they are now offering five,
six, seven or even eight years to pay off
the auto loan. All this is doing is
enabling people to take on more debt than
they can really afford.
Many people are taking out auto loans for
these longer terms and are still paying on
the auto loan six years later – and may
not even have the car any longer. The new
longer terms also make it possible for
them to put down less money on a nicer
car, hence more debt that they cannot
afford.
Experts say that consumers are coming into
dealerships and saying that they can
afford a certain monthly payment and that
is all – so auto loan companies are simply
giving them that payment, but over a
longer period of time. They say that this
is the worst possible way of shopping for
a car, as they cannot truly afford what
they are buying; it just seems that they
can because of the length of the auto
loan.
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September 2007 Archives
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