Auto Loans Taking Longer to Pay Off

In an attempt to save themselves some additional monthly cash, many Americans are changing their auto loans to longer terms. It doesn’t matter whether it is a foreign or domestic car or if it is a used car loan or a new car loan – they are extending their terms.

A recent survey shows that Americans today take approximately two years longer to pay off their auto loans than they ever have before. The problem with this is that no one is benefiting from it. The automakers are looking at deficits and consumers are faced with cars that they are paying even more for than before.

By making the car loan longer, consumers are paying more interest on their car loans – which makes it a much more expensive car than if they had taken a shorter term. Years ago the average car loan was around three years. Now car loans are more likely to be five years on up – with some as many as seven.

Not only that, but with car makers offering even longer terms for auto loans, even as long as eight year car loans, the debt will continue to grow. Instead of steering consumers towards cars that they could afford in three year car loans, they are pushing them toward cars that they can only afford if they spread it over a ridiculous number of years.




Back to  September 2008 Archives