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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