Customers also are more likely to be upside down when they are ready to trade, owing more on the trade-in than the car is worth. That makes it more difficult to finance the next car, and it can hurt customer loyalty.
But the auto finance trend is toward longer terms as customers seek lower monthly payments.
Most borrowers are in five- or six-year terms, but seven-year loans were the fastest-growing category in the third quarter vs. the year-ago quarter, according to Experian Automotive. Experian reported that loans in the 73-to-84-month range accounted for 12.8 percent of auto loans in the third quarter, up from 10.3 percent a year earlier.
"People are going to 60 months, 72 months, but we're trying to stay away from 84 months," Doll said in an interview at the Los Angeles Auto Show last week. Chase Auto Finance provides private-label financing for Subaru of America.
Mark Kaczynski, president of Nissan Motor Acceptance Corp., says the company recently started offering somewhat unusual 75-month loans.
NMAC is reluctant to offer 84-month loans, but it wants to retain customers looking for loans beyond 72 months, he says.
"As a captive, we never want to see those longer-term cycles because they tend to degrade loyalty performance," Kaczynski said. "But we wanted to prevent some of that business going out to 84 months."