Buyers stretch car loans

That, coincidentally, was the median age of cars on U.S. roads last year, according to consulting firm R.L. Polk & Co. Dealers and auto executives attribute the extension of auto loan terms to several factors, ranging from the improved quality of cars that has led people to expect them to last longer, to consumers’ efforts to stretch their budgets in a tough economy.

“Obviously it’s a way to get the payments down,” said Mike Stoller, a spokesman for GMAC LLC, the finance firm partly owned by General Motors Corp. Lenders and dealers say loans stretching 84 months and longer represent a tiny fraction of the total, and they say they offer them only to customers with excellent credit.

Toyota Motor Corp.’s Toyota Financial Services, which began offering 84-month loans last summer, says those loans account for 4 percent of the vehicle sales it finances and carry interest rates that are a half to three-quarters of a percentage point higher than rates on six-year loans. At the River Oaks Chrysler Jeep dealership in Houston, Vice President Alan Helfman says 96-month loans are available, “but the longest we do is 84 months.

It is to good people with good credit.” Customers applying for such loans are typically government employees or retirees, people on a fixed income looking for an affordable monthly payment, he said. Product guarantees such as Chrysler’s lifetime drivetrain warranty give consumers the confidence to take out long loans, Helfman said. But dealers and lenders question the logic of taking out extended loans on a depreciating asset.