Retail Front

The Long and Short of Auto Loans Now vs. Then


Loans of 1-12 months once accounted for 24% of auto financing.

Last week, I asked readers and car-industry Facebook folks what they thought of 84-month auto loans. Plenty of people weighed in. Here’s a sampling:

  • Jim Ziegler says they’re “insane.”
  • A dealership F&I person says they only reduce monthly down payments by $5, maybe $10, but the additional interest costs are “crazy.”
  • Someone else calls them “an unfortunate reality.” Another person brands them as “a travesty,” especially when leasing serves as an alternative to protracted paybacks.
  • Maureen McDonald, a FB friend (and offline friend, too), says, “Simply put, cars cost too much,” necessitating the need for long-term financing.
  • Friend and former colleague Cliff Banks says: "We were having this discussion in 2005 – only it was 60-month loans.”

Let’s go back even farther, to 1940, with WardsAuto Flashback as our time-traveling vehicle, A Ward’s Automotive Reports in June of that year almost gives the impression 84-day loans were the standard of the day. Here’s what Ward’s reported 75 years ago:

 “Longer term financing is making inroads in the automotive market, according to information from the auto finance industry. Contracts with a maturity date of 1-12 months accounted for 24% of auto financing in 1939 vs. 28% a year earlier.

“Those stretching 13-18 months fell to 35% from 47% in 1938, while contracts extending 19 months or more increased to 41% in 1939 from prior-year’s 25%.

“At the same time “substandard” contracts, those with less than a 33% down payment, rose to 29% in 1939 from 19% in 1938.”

People coughing up a 33% down payment sure aren’t seen as “substandard” today. They usually go by another name: super-prime borrowers.

Here’s where we are today, according to Experian Automotive:

  • The average loan term for new and used vehicles has increased by one month, reaching new all-time highs of 67 and 62 months, respectively.
  • Longer loans (terms lasting 73 to 84 months) accounted for a record-setting 29.5% of all new vehicles financed, an 18.6% rise over first-quarter 2014 and the highest percentage on record since Experian began publicly tracking this data in 2006.
  • Long-term used-vehicle loans also broke records, with terms of 73 to 84 months, reaching 16% in first quarter 2015, increasing from 12.94% the previous year – also the highest on record.

So, that’s the long and short of auto loans now vs. then.


Discuss this Blog Entry 2

on Sep 22, 2015

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on Sep 22, 2015

Lets not forget that the average car is road worthy much longer that decades ago. (I still see issues with long loans but eh sky may not be falling).

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What's Retail Front?

Blogs about automotive retailing, commenting on news impacting the business of selling vehicles.


Steve Finlay

Steve Finlay is the editor of WardsAuto Dealer Business magazine and a senior editor for His journalism career started 42 years ago as a crime reporter. A Michigan native, he likes...

Jim Ziegler

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.
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