84-month loans surge for new and used vehicles

Wells Fargo would continue to examine the topic, but “it’s not what we do today,” Sanders said.

Chuck Jones, COO of Truist Dealer Financial Services, told the summit his bank had offered 84-month auto loans for years.

“We don’t use that to fit a payment,” he said.

Instead, Truist offered them as a “lease fighter” because the bank doesn’t have an auto leasing business, he said.

Jones also noted the extended terms originated at SunTrust, the bank that merged with BB&T to become Truist in 2019. SunTrust had a client base with significant disposable income, he said.

Truist has also found 84-month debt to be “really well-performing loans,” Jones said.

Tim Owens, a consumer vehicle lending executive at Bank of America, called his bank a “late entry into that game,” one that had only offered 84-month loans for about six months. It was only around 3 percent of Bank of America’s portfolio, compared to what he described as a 23 percent proportion in the market.

“We’re not really doing it for those that are stretching for affordability,” he said. It was an option for qualified customers, he said.

Jim Manelis, head of strategic alliances for Chase Auto, said Chase had offered 84-month loans for “a little bit of time,” but it remained rare.

“We don’t do a ton of it,” Manelis said. “We definitely use it sparingly as it is appropriate.”

As Jones indicated, longer debt might be less risky than it seems.

Nonprime consumers were more likely to pay 84-month loans than 72-month loans, according to Open Lending, which recently announced it had begun to underwrite insurance on seven-year car debt.

“It’s all payment driven,” Matt Roe, chief revenue officer of Open Lending, told Automotive News in September.

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