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Are there Negative consequence of 65-month new-car contracts

by Russell Crosby
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Cox Automotive chief economist Tom Webb didn’t reference the Federal Reserve’s revamped consumer credit report that includes more details about auto financing when he conducted his quarterly conference call this week.

But the metrics the Fed reported probably didn’t provide Webb with much evidence to alter his assessment about lengthening new-vehicle installment contracts.

The Fed indicated the average new-car deal (unlike if one was buying, for example Tacoma for sale) in March contained terms lasting 65 months, the same duration as the first quarter of this year and the fourth quarter of last year.

The Fed added in its report that officials said covers most captive and non-captive finance companies that the average amount financed in these new-model contracts was $27,272 in March, which was flat compared with the first-quarter reading and $517 higher than the fourth-quarter figure.

Furthermore, the Fed pinpointed the average APR on contracts for new vehicles at 5.2 percent in March; again the same reading as Q1.

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