A decade ago, the typical auto loan extended 48 months. Now according to J.D. Power and Associates Power Information Network division, the most popular car loans extend six years or more, between 72 and 80 months.

The Detroit News reports that dealers and auto executives attribute the shift to longer loans to increased reliability of modern cars, and people expecting them to last longer, as well as consumers needing to stretch their dollars in a tightening economy. As owners take longer to pay off their cars, not only do they remain out of the new-car buying pool, but their disposable income is also funneled into a car payment that often runs several hundred dollars. The potential impact to the specialty-equipment industry is not insignificant.

A recent survey conducted by the SEMA Research & Information Center found that 23% of respondents are still paying off their car loan, with an average of 31 months left until maturity. With an average payment of $428 a month, 49% of those surveyed said that their car payment has caused them to delay specialty-equipment purchases.

But even if they’re delaying purchase, they haven’t stopped buying altogether. The group still paying off their cars spent an average of $2,400 on specialty equipment last year and plan to spend $2,100 this year. Of the 77% who’ve paid off their loans, 25% did so five or more years ago, 15% within the last two years. These owners, not surprisingly, spend more than those indebted—$3,400 on specialty equipment last year.

For the specialty-equipment manufacturer, retailer or installer, longer vehicle loans represent both challenge and opportunity. The challenge is selling to consumers who want to personalize their ride, but are saddled with a $400 car payment. Opportunity, on the other hand, lies in a lower (if longer) payment, allowing enthusiasts to allocate at least some of their money to specialty-equipment spending.

SEMA’s survey found that cash was the most popular method of payment, 68% having purchased some or all of their parts with cash. Personal credit cards ranked second, 49% having used plastic for their purchases.

Ironically, the most creative place to get financing for parts and accessories these days is at the dealership. SEMA research shows that auto dealers capture about $3.8 billion of industry sales annually, roughly 10% of the market. Dealer sales typically involve restyling and appearance products and truck accessories, categories that as a whole accounted for a 58% share of the specialty-equipment market, or $21 billion at retail.

This figure does not include wheel sales, which account for around 26% of specialty-equipment sales at the dealership level.

Only 2% of SEMA survey respondents, however, noted that they’d financed parts and accessories this way.

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Source: "Buyers Stretch Car Loans," Christine Tierney, The Detroit News, 2/23/08