Loans lasting 73 to 84 months have also increased, according to Experian, making up 32.1 percent of new-vehicle loan share in the fourth quarter of 2016, compared with 29 percent a year earlier. On the used-vehicle side, loans lasting 73 to 84 months accounted for 18 percent of the share, up from 16 percent a year earlier.
Moreover, there has been upward movement within the 73-84-month loan segment, according to Melinda Zabritski, senior director of automotive finance at Experian. "Years ago, when you saw lenders starting to move into that category, they were on the low end of it," between 73 and 75 months, she said. "Now we're seeing a shift within that category of more loans truly being written at 84."
Despite carrying loans that can extend to the better part of a decade, many consumers continue to trade in their vehicles every few years, leading to higher negative-equity amounts.
"Think about the way the principal and the interest accumulates over a 60-month loan, or a 66 or 72 [month] loan," said Cheryl Miller, vice president of lender solutions at Dealertrack. "The equity the consumer is building from a principal perspective is [lower] than it is on a shorter duration loan."
If consumers are accustomed, say, to a five-year trade-in cycle but extend their term to six years and beyond to keep the monthly payments low, they are "getting caught in this vicious cycle," Drury said.