Tuesday, Nov. 14, 2006, 07:00 PM UPDATED 11:59 AMBy Nick Zulovich
WESTLAKE VILLAGE, Calif. — The domestic automakers financing incentives earlier this year, which included zero-percent APR on 72-month loans even for subprime customers, are one factor contributing to the new popularity of 72-month loan terms in the new-vehicle financing business, according to Power Information Network's PIN Insights.
According to PIN, 72-month loans recently surpassed 60-month loans, which had been the most common during the previous two years.
"So far in 2006, more than four of every 10 new-vehicle loans have been financed for six years, up from three in 10 two years ago," explained PIN executives.
"In contrast, five-year loans have slipped from half the business to less than 40 percent today. Financing in the used-vehicle industry is following a similar trend, though five-year loans remain the most popular in this market," said PIN.
Used SUVs, Pickups Show Price Rebound
In other news, PIN reported that transaction prices for used SUVs, including both large and midsize, in addition to large pickups, have been climbing since summer when compared to last year's prices.
This suggests that demand for these units is stabilizing or rising slightly as gas prices declined, PIN said.
"This positive trend follows three to four months during spring when prices for these used vehicles were sliding in the face of $3 gas prices," PIN executives highlighted. "In the first half of October, the transaction prices for used vehicles in each of these three segments were even with or above a year ago."