With that said, the majority of consumers still rely on loans to get into a vehicle. In 2011, loans of 73 months and longer so far accounted for 9 percent of new-vehicle loans, according to J. D. Power. This is up from 6 percent in 2009 and 2010 and close to the peak of 10 percent in 2008, reports consulting firm J.D. Power and Associates.
Ironically, the average loan in 1975 was 37.6 months, when the average retail sales price of a vehicle was approximately $4,750. Today, the average loan has almost doubled to 63.03 months. And the average price of a vehicle has been driven up almost seven times from that of the seventies to $27,959, according to an article I came across in Automotive News, an industry trade journal.
Well this is good news for consumers, since auto lenders are allowing consumers to stretch out their loans again. These stretchable loans are also known as 'Car Mortgages' too. The editor of this website wrote an article about this topic a few years ago. To read the Black Enterprise article, click here.
Now while lenders are being generous again. We caution our readers to think twice about stretching out the loan. The real question to ask yourself: Are you buying more car than what you can afford?
Yep, that may be the real question that rattles the nerve and points one in the right direction.
Also here are some other interesting facts that we found as it relates to stretchable car loans:
Loans of 61 to 72 months account for 40 percent of the loans written, J.D. Power data show. Consumers usually are steered this direction in order to reach a manageable lower monthly payment.
From 1971 to 1983, three-year car loans were the norm, reports the Federal Reserve in its data from finance companies.
In June 1984, the average maturity exceeded 48 months for the first time. In 2003, the average maturity exceeded 60 months for the first time.
Since then, the average term has zigzagged upward peaking at 67 months in July 2008 and never dipping below 59 months. In January, the latest figure available, the average maturity was just over 62 months.