DEARBORN, Mich. — In a dealer bulletin obtained by F&I and Showroom magazine, Ford Motor Credit announced the availability of 84-month financing on new retail and subvented rate contracts.

The 84-month program, which allows for maximum interest rate markup of 100 basis points on standard contracts, is only available to car buyers with FICO scores at and above 700. The program will require a minimum of $15,000 in financing, with advances set at a maximum 115%.

"Customer demand for 84-month financing is increasing,” the captive stated in its April 5 dealer bulletin. “In the spirit of supporting the sale of Ford and Lincoln vehicles, as well as providing you with a sustained competitive advantage, Ford Credit is offering 84-month new retail financing effective April 5.”

Terms have been stretching, according to recent auto finance data, with consumers looking for ways to keep their monthly payments affordable as vehicle prices continue to rise.

In the fourth quarter 2015, according to Experian Automotive, vehicles loans with terms longer than 60 months accounted for 71% of all new vehicles financed during the period. The firm also noted in its quarterly report that auto loans with terms in the 61- to 72-month term band accounted for 42% of new vehicles, while loans with terms between 73 and 84 months accounted for 29% of all new vehicles financed in the fourth quarter — a 12% jump from the prior-year period.

In its bulletin, the captive urged dealers to consider the impacts of longer term loans, noting that “the longer the contract term, the longer it takes the customer to be in an equity position, and the longer it takes for the customer to return to your showroom to trade.”

The bulletin also urged dealers to educate customers about the high interest costs associated with longer term loans, noting that “shorter term financing and leasing are likely better options” for most customers.

“Terms of more than 72 months have increased to 23% of all new retail financed vehicles in the U.S.,” the bulletin stated. “While extended-term financing is appealing and allows the customer to purchase more vehicle at a lesser payment, it is important to consider the impact on trade-cycle management and customer loyalty.

“Ford and Lincoln are refreshing their vehicles more frequently with improvements to technology, safety features and fuel efficiency,” the bulletin continued. “Longer term financing may also delay a customer’s ability to upgrade to the latest and greatest.”

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