Toyota Motor Corp, the world's third-largest automaker, announced on Nov. 28 it would extend its offer of interest-free loans for three models in the United States until Jan. 7.

Toyota had originally planned to end the financing promotion on Nov. 30, but decided to extend it in line with similar moves by General Motors Corp., Ford Motor Co., and the Chrysler arm of DaimlerChrysler AG.

"We must extend interest-free loans to compete with other car makers," a Toyota spokesman said.

However, Toyota's zero percent interest loans in the United States are limited to the 2001 model Corolla, 4Runner sport utility vehicle and Tundra full-size pickup under 36-month installment sales, according to the company.

The interest-free shootout, started by GM then quickly matched by others, began as a response to the September 11 terrorist attacks on the United States. The financing deals were designed to help bolster consumer confidence in the wake of the attacks.

Earlier in November GM extended its offer of interest-free loans on some vehicles until Jan. 2, although it scaled back the range of models to which the deals applied. Chrysler and Ford have also extended some interest-free loan offers until early January.

Mitsubishi Motors Corp. has been offering interest-free loans but hasn't yet decided whether to continue them in December, according to company officials.

The special financing deals have been credited with lifting U.S. car sales to a record pace in October but analysts and car industry executives have warned the loans chew away at profit margins and are unsustainable over the long term.

Many analysts believe the loan deals are pulling in sales now that might otherwise have been made in the next few months, setting the stage for a possible deep slump next year.

Honda Motor Co. did not offer interest-free loans; Nissan Motor Co. offered such loans in October but has not extended them.