One dealership perk to long-term car loans? There's more opportunity to convince customers that they need F&I products.
In general, the industry prefers shorter trade cycles because customers come back to buy more often. But one upside to long trade cycles is that customers see more value in some F&I products, industry insiders say.
Through March this year, the average length of a new-vehicle loan was 68 months, according to Experian, nearly 10 months shy of the average length of new-vehicle ownership. Consumers hang onto their new vehicles for 77.8 months, or about six-and-a-half years, on average, according to a 2015 IHS analysis.
Dealerships can create more customer awareness around the value of F&I products because of the long-term loan and ownership trend, Scott Karchunas, president of Protective Asset Protection, and other F&I vendors say. "It provides F&I professionals with more tools in the toolkit" with which to build a value proposition for F&I products, Karchunas said.
As long as lenders are willing to finance F&I products, sales of those products are "probably one of the strongest factors we have in terms of [dealership] F&I growth," said Larry Pomarico, senior vice president of sales for SouthWest Dealer Services.