| Auto finance companies in the U.S. are switching to | | | | sport-utility segments. |
| longer term car loans, in an attempt to downsize | | | | Longer term car loans such as 72 or 84 months, can |
| their involvement in the leasing business. | | | | reduce monthly payments for buyers, putting them |
| Longer term auto finance loans have a slower | | | | on par with payments under leasing agreements. |
| repayment of principal, as well as increase the risk of | | | | However long term car financing heightens the risk |
| losses resulting from defaults in payments. Leasing | | | | factor of defaults, as the unpaid principal would be |
| companies in the auto finance industry also have to | | | | higher than that of a short-term loan. Auto financing |
| cushion themselves with reserve funds to make up | | | | companies need to factor the loss perspective into |
| for possible losses from these car loans. | | | | the prices charged to customers who avail such loans. |
| Longer term car loans now stretch as long as7 years | | | | Approximately 20% of U.S. auto sales are conducted |
| or 84 months. GM, Ford and Chrysler LLC, consider | | | | by leasing companies, who offer lower monthly |
| long term auto loans as a way of shedding heavy | | | | payments on vehicles. However under today’s |
| inventories. Soaring fuel prices have caused a | | | | credit crunch, leasing has lost its lucrative edge amid |
| catalytic decline in consumer confidence and have hit | | | | dipping resale values. You can visit for more auto |
| the fortunes of auto makers, who are now faced | | | | finance tips and latest automotive news. |
| with plunging sales especially in the pickup trucks and | | | | |
