Used-car loans are getting longer, with the average used-car buyer taking out a 60-month loan in the first quarter, data from Experian Automotive show.
Loans of 61 to 84 months made up nearly half of used-vehicle loans in the first quarter, Experian says.
Lengthening of used-car loan terms "has been significant," says Tom Webb, chief economist for Manheim Consulting in Atlanta.
Used-car loans of 61 to 72 months rose 6 percent in the first quarter from the year-earlier level, while those of 73 to 84 months jumped 23 percent. Loans with terms of 60 months or fewer declined.
But should the buyer of a three- or six-year-old vehicle commit to pay interest for five or seven years? And is it in the interests of lenders and dealerships to encourage them to sign on the dotted line?
"Some people already think it's a bubble," Webb says of the trend toward longer auto loans. "I think it's a bubble in the early stages of formation."