The Cult of Cars, Racing and Everything That Moves You.
We may earn a commission from links on this page

84-Month Auto Loans Are Becoming More Common Because You People Can't Stop Buying Trucks

We may earn a commission from links on this page.

Americans have an insatiable, burning appetite for large trucks and SUVs right now, and so dealers are handling it by doling out auto loans with record terms. A record amount of loans have 72-month terms, but now more lenders are moving toward 84-months to keep the sales drive churning, reports Bloomberg.


Records have been set in practically every metric for auto loans, as of late: Americans owe a record $1.1 trillion in loans; a record 20 percent of new car loans have 72 month terms; people are overall paying record amounts for a new car; and a record 6.3 million people are 90 days or more behind on their loans.

Naturally, the industry’s responding by helping more buyers continue to stretch their wallets.


Here’s more from Bloomberg:

More than two-thirds of U.S. auto sales are now light trucks, which includes pickups and SUVs, and new-fangled tech inside them has helped drive prices to record highs of more than $35,000. While this has helped automakers mint money even as total industry sales slip, it also means the debt burden on consumers is getting heavier. Lenders are stretching out loan terms to keep monthly payments manageable and help dealers close sales.

Sounds great for the automakers. But with interest rates rising, someone needs to come up with a solution to keep sales flowing.

“I don’t think we’re going to see any reduction in terms until we see changes in pricing or what consumers are buying,” said Melinda Zabritski, a senior director at Experian. “If anything, we’re starting to see more lenders who would previously do a 72- or 75- move into the 84-month loan category.


Seven years to keep the same, quickly depreciating car. It’s quite an arrangement. But the industry’s scrambling. Recently, Bloomberg noted that subprime car buyers—which comprise 20-25 percent of auto sales, and helped the industry hit record sales in 2017, thanks to their efforts to offer loose credit—are simply disappearing from the new showrooms.

I know larger vehicles are more fuel efficient nowadays, so if gas prices were to spike or if the economy hit a recession, maybe things wouldn’t be as bad as they were a decade ago. But this certainly seems to be trending in a bad direction for the industry and, more importantly, consumers who could wind up stuck with too expensive of loans they can’t afford.


Update (1:27 p.m.): We switched the top shot from F150s to Rams, as Bloomberg’s story explicitly points out that Ram trucks have the average longest loan terms in 2017.