In fact, more than half of those borrowing to finance their vehicles are already opting for 72-month amortizations or longer, representing a nearly 40-percentage point jump from just five years ago, reads a report from JD Power and Associates.
“Consumers today just don’t think of the car as being $28,500,” said JD Ney, with JD Power. “They think of it as being $500 a month. There’s a certain pain threshold – whatever it takes, we’ll try and keep that monthly payment.”
Playing with amortization on car loans is one way mortgage brokers have advised clients looking to prepare for a mortgage application.
Still, most mortgage professionals have counselled borrowers to opt for less expensive auto purchases as a better of preparing to meet debt-service requirements and win home loan financing.
That advice may be increasingly hard to follow, with brokers pointing to mortgage rule changes that have only strained the ability of many borrowers to qualify.
That is a huge increase from just five years ago, when 14 per cent of buyers borrowed for six years or more, said J.D. Ney, an automotive account analyst in the consulting firm’s Canadian office.
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