Extended Term Financing

The concept of borrowing money for ten, fifteen or even twenty years may seem like an eternity, however, if you are considering a large ticket purchase you may be surprised to learn how affordable it becomes when you explore extending the term of your loan.

Extended term financing became very popular with mortgage lending as lending institutions offered thirty year terms to make home ownership more affordable. As large ticket items such as airplanes, boats and recreational vehicles became more popular and expensive, lenders were forced with making the decision to extend loan terms from seven years out to as far as 20 years depending on the amount financed.

When it came time to extend loan terms on large ticket items, the concern of extending a term on a piece of collateral that depreciates faster than the repayment of the loan became a real issue. What lenders realized however, is that even though the term of the loan exceeds the useful life of the product being financed, consumers tend to only keep the product for an average of four years. At this point, the typical consumer would trade up and purchase a newer product with more features or a much larger product. Lenders began to realize that consumers purchasing boats, recreational vehicle and airplanes were purchasing into a lifestyle that came with product loyalty and predictable borrowing habits.

Consumers purchasing large ticket items such as boats, RVs and airplanes tend to have more discretionary income and leisure time on their hands. These consumers are viewed by lending institutions to be the most creditworthy borrowers. To that end, lenders are willing to offer the best rates and terms to attract and retain as many of these customers as possible.