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Chrysler Adds 84-Month Financing, As Other Automakers Tread Carefully


As the price of vehicles pushes upward and household income stagnates, it’s not all that surprising that new-car shoppers are increasingly looking not to traditional 60-month loans, or 72-month ones, but to the longest 84-month loans.

According to Experian Automotive, this year the length of the average automotive loan reached 66 months for the first time, and loans in the 73-to-84-month category already made up nearly 25 percent of the auto-loan market as of the first quarter of this year. That’s up from less than 20 percent just a year earlier.

In recent years, automakers haven’t directly embraced this trend, however, until now. Beginning back in October, Chrysler started adding 84-month financing, through its Chrysler Capital affiliate.

The deal, as of this past month, applied to the 2015 Chrysler 200, as well as the 2015 Dodge Dart, 2015 Dodge Grand Caravan, and the 2014 and 2015 Chrysler Town & Country, as well as 2014-model-year versions of the Jeep Compass and Patriot. Currently we found dealers applying this to other models, like the Fiat 500L, but Chrysler Capital didn’t provide us a complete list of vehicles covered.

Not a strategy to reach out to the subprime set

Laurie Kight, of Chrysler Capital, confirmed that the program was launched in October, and it’s intended to supplement other APR incentive options. And to disspell a popular misconception, moving from a 72-month to 84-month loan term doesn’t necessarily mean that buyers have a worse credit record or are more likely to default.

“The program is for prime applicants and is not being utilized to finance subprime customers in longer term loans,” Kight noted.

This is the first time a major U.S. mainstream automaker has offered 84-month financing since the 2008 bank bailout and its aftermath, involving an industry-wide pullback on consumer credit (and widespread affects on auto sales).

It should be noted that Chrysler Capital is not actually a ‘captive finance’ company, under ownership and control of the automaker, in the way that GMAC was an arm of GM prior to its 2009 bankruptcy, or in the way that GM Financial or Ford Credit function for those automakers now. Santander Consumer USA operates as Chrysler Capital under a private-label agreement.

This isn't the first time for 'factory' 84-month offers

Prior to the 2009, a number of automakers’ captive-finance operations had dabbled with 84-month loans. Toyota offered 84-month financing on some vehicles; so did GMAC, on a limited basis. And Ford Credit, which did a small U.S. pilot offer of 84-monthy financing “many years ago,” according to the company.

Neither Ford Credit nor GM Financial have any plans to offer 84-month financing in the near future.
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