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The average new car loan term broke 70 months for the first time in March, and it could get longer.
Edmunds data showed that 35.3 percent of loans issued last month had terms from 73-84 months, and that’s up from 35.3 months in February. Now automakers are rolling out new zero percent interest, 84-month loan programs as sales crater due to the coronavirus pandemic.
General Motors, Fiat Chrysler, Hyundai and Genesis are each offering such deals on several models for well-qualified buyers, some coupled with deferred payments, and there’s even a zero percent interest, 72-month loan available for the electric Chevrolet Bolt that comes with a $4,750 discount.
J.D. Power reported that nearly a quarter of sales completed during the last week in March included 84-month financing, while Edmunds saw the share of zero percent loans of all durations jump from 3.6 percent to 4.7 percent during the month.
The average interest rate also ticked up in March, however, hitting 5.8 percent, while loans at 10 percent and higher rates made up 12.8 percent of sales, up from 10.7 percent in February.
According to Edmunds, there aren’t many negatives to going with a long-term zero percent loan, as they can typically be paid off early without penalty. But you’ll need a very good credit rating to qualify and have to do the math to make sure it’s better overall than any of the other offers available on the model you’re interested in.