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Auto Finance Continues to Embrace Longer Loans, PIN Reports

April 1, 2008

Loan terms continue to stretch, according to recent data from the Power Information Network (PIN), with 72- and 84-month loan terms doubling since 2003 and 2005, respectively.

Led by non-captives, nearly 40 percent of new-vehicle loans between Jan. 1 and March 16, 2008, were financed for 72-77.9 months. Four percent of new-vehicle loans were financed for 84-89.9 months.

Although non-captives finance the majority of longer-term loans, captives are beginning to follow the trend. The percentage of 72-month loans for captives was 14.9 percent in 2003, but has jumped to 31.7 percent in 2008. For non-captives, 72-month loans have gone from 29 percent in 2003 to 49 percent in 2008.

Loan terms of 84 months are lower, but are increasing as well. Captives did not finance any 84-month loans in 2003, but that number has increased to 1.5 percent in 2008. The percentage of 84-month loans for non-captives has gone from 1.6 percent in 2003 to 6.8 percent in 2008.

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