Ally Financial joins Toyota Financial in offering 84-month auto loans amid industry risk concerns.
Ally Financial joins Toyota Financial in offering 84-month auto loans amid industry risk concerns.Financial observers, meanwhile, are cautious, citing concerns of risks to the US economy if things follow the same path as the housing bubble in 2007 and 2008.
Though most lenders aren’t comfortable with the idea of 84-month auto loans, Ally Financial is going full steam ahead with such loans.

Automotive News reports the former financial arm of General Motors — joining Toyota Financial Services in the seven-year lending game — is taking on 84-month loans because, per CEO Jeffrey Brown, the lender hadn’t taken enough risk over the past two to three years. Representative Gina Proia adds that the loan terms would be offered to well-qualified consumers in 24 states in 2015 as part of Ally’s commitment “to offering competitive products designed to help dealers provide their customers with a variety of options that meet a range of consumer credit needs and monthly payment preferences.”

However, Ally and Toyota Financial are among the only ones to offer such terms, as most lenders want their customers to come back more often. Financial observers, meanwhile, are watching longer-term loans with a cautious eye, citing concerns of risks to the United States economy down the road if things were to follow the same path as the housing bubble in 2007 and 2008.

Moody’s Analytics senior director Cristian deRitis is among those observers, though he isn’t worried about the risks attached, citing higher lending standards for 84-month loans, the small market size compared to the overall auto financing market, and the consumer base for most of the loans coming from credit unions, whose members don’t fall into delinquency often.

Speaking of the overall market, the average length for an auto loan is 66 months for new vehicles in Q4 2014, 62 months for used models. Both figures are up one month over the same period in 2013.