Consumer warning over extended term loans for vehicles
The Financial and Consumer Affairs Authority of Saskatchewan (FCAA) is warning the public about the dangers of buying a vehicle on extended term loans.
The government agency said financing over seven or eight years with low payments can leave the consumer at risk of negative equity when they try to trade-in that vehicle because they could be owing more than what it’s worth.
In a media release FCAA’s Consumer Protection Division Deputy Director Denny Huyghebaert said compared to a four or five-year financing period seven or eight years was a significant time difference.
“A vehicle will depreciate rapidly the moment it is driven off the lot. Consumers who purchase based on low payments due to extended term loans are at a greater risk of being in a negative equity position when it comes time to trade-in and purchase another car,” he said.