As vehicle prices increase, more and more automakers are offering terms that are longer than ever before. The industry norm of 60 months has now ballooned to 84 months as automakers seem to be willing to burden buyers for longer periods to make the higher vehicle prices easier to swallow. After Honda’s recent announcement of offering 84 months’ loans, Cars Direct reports Ford is filing in as the next automaker to offer seven-year financing terms.
The terms, sent out in a dealer bulletin, are only available on Ford Blue Advantage “Gold Certified” (which is just fancy marketing speak for a vehicle inspection) and Lincoln CPO vehicles. What’s strange is that the APR offered for these used vehicles is better than what Ford offers on their new ones.
On 2020 to 2022-model-year CPO Ford models, the listed rate is 4.99% APR. In the case of a Ford Mustang, that’s actually a lower rate than the brand’s advertised 84-month rate of 6.9% for a new 2022 model. For some buyers, this may present an unusual opportunity when comparing the cost to buy used versus new.
And that 8.9 percent rate for new vehicles is the default rate on various new Ford models. You’ll find it offered on vehicles like the Maverick and Escape. But it gets a bit dicey on models with special trim levels. Like the F-150, where you can get 84-month financing on a King Ranch trim, but not on the Tremor or Raptor.
Not every vehicle or person will qualify for that 4.9 percent CPO rate however. The 84-month financing is only available on vehicles that are up to three years old and open to customers with “a FICO score of at least 680, finance a minimum amount of $15,000, and fall within what Ford Credit calls Tier 0 to Tier 2 credit.”
Ford’s Vice President of Sales Operations Jim Spengler called the company’s decision to offer seven-year terms “an effort to provide innovative financing solutions that exceed customer expectations.” But is putting someone in a potentially bad financial situation nearly a decade down the line innovative? As Cars Direct pointed out and I’ve mentioned before, these long loan terms are far from a good idea. The car market is unusual right now and values are high. When things get back to normal and prices stabilize, someone might find themselves severely upside down on a vehicle with years left in their loan term.