Ford Motor Credit Co., one of the biggest lenders in new-vehicle financing, has joined the trend toward longer auto loans, rolling out 75-month terms nationwide starting today. The company previously had conducted a pilot program.
Earlier this week, CEO Bernard Silverstone indicated Ford Credit had been somewhat reluctant to extend terms on new-vehicle loans to 75 months.
“Clearly, we would prefer customers to finance shorter terms,” he said during the company’s investor day presentation on Monday. “However, we also watch market trends.”
He added: “We don’t expect [75-month terms] to be a large part of our portfolio.”
Ford Credit was the nation's second-largest new-vehicle lender in the second quarter of 2014, behind Toyota Financial Services, according to Experian Automotive.
Pricey cars, low payments
The average loan term is increasing industrywide. Longer terms, coupled with today’s low interest rates, enable customers to buy pricier cars while keeping monthly payments affordable, analysts say. Longer-term loans have also helped support the steady rise in U.S. light-vehicle sales.