From “56 for ’56“ in "36" to .... "97"

Introducing the 97-Month Car Loan


In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever, according to Experian Information Solutions Inc. Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months and there were even a few as long as 97 months. Four years ago, only 11% of loans fell into this category. Such long term loans can present consumers and lenders with heightened risk. With a six- or seven-year loan, it takes car-buyers longer to reach the point where they owe less on the car than it is worth. Having "negative equity" or being "upside down" in a car makes it harder to trade or sell the vehicle if the owner can't make payments.

The length of loans has come a long way since Lee Iacocca, then a Ford regional manager, helped pioneer auto loans in the 1950s. He became a management star by developing a '56 for $56 sales pitch. The idea: consumers could buy a 1956 Ford for 20% down and $56 a month. The loans were paid off in just 36 months.
Comment: Image source with details on “56 for ’56“.
In 1956, Iacocca came up with an inventive new way to sell cars when he developed the “56 for ’56“. The policy meant that any customer that bought a new 1956 Ford should be able to do it with a 20 percent down payment, followed by monthly payments of $56 for three years. After the idea was applied across Ford, Iacocca was thought to be responsible for the sale of an additional 75,000 extra cars. Iacocca’s initiative meant that his profile was enlarged resulting in a big promotion to Dearborn, Michigan i.e. headoffice as the head of car marketing.
Comment: We were in the car loan trap for decades. This was largely my fault as I was always buying new cars. When that car was paid off I would buy another new one. We broke that cycle with our last car by saving and paying cash. Negotiating for a new car is much easier when no loan is involved. Our go forward plan is to save $ 100 per week towards  a new car. We currently have 58,000 miles our our Buick. I hope to keep it 150,000 miles and have plenty of cash to buy a like model. We average about 15,000 miles per year. So in about 6 years we will will be at 150,000 and have plenty saved. We also save $ 45 per week towards auto repairs.

About the '56 Ford. I visited a Ford plant with my parents when I was 7. I fell in love with the '56 Ford. I could imagine cruising with Annette Funicello


  1. High risk loans on depreciating collateral...what could possibly go wrong?

    I vividly remember a friend of mine noting that they'd refinanced their car. I thought they were flat out insane to do so....and now we're pushing eight year loans at over 20% on unsuspecting victims.

    (Mr. Miller's loan was for four years on a five year old car....he got flat out robbed, so the lender and the dealer deserve whatever the bankruptcy court dishes out to them)

  2. Insanity. 22% on a car loan? Having "stuff" sure can be enslaving.

  3. My son, bought absolutely the cheapest car he could find and used it for about a year and a half while he finished college. He bought it for under $ 500 (it was a Toyota something) ... used it for that period and sold it for $ 375.

    Then he bought a 20 year old Toyota which is his daily driver. (for cash)


Any anonymous comments with links will be rejected. Please do not comment off-topic