The number of Fifth Third Bank customers opting for 84-month loans grew 15% to 20% year over year as of Sept. 29, Head of Mortgage Lending and Indirect Dealer Services James Sias says on the latest “Auto Finance News Podcast.”

“Customers have demonstrated they are willing to keep vehicles longer, particularly when it means that the new vehicle they’re going to buy is going to require a higher payment,” he says.

The Cincinnati-based bank does not want to offer the lowest rate or extend to 96-month terms without making sure it “makes sense from a long-term financial perspective for the borrower and the bank,” Sias says.

“Rate matters enormously to customers and dealers, and we’ve got to be competitive,” he says. “But responsible affordability is the combination of price structure, down payment, term. … Lenders have to be careful about confusing lower monthly payments with true affordability.”

The share of new-vehicle buyers with 72-month or longer terms rose 580 basis points (bps) YoY and 20 bps month over month to a record 31.3% in August, according to a Sept. 10 Cox Automotive release.

While other banks are increasing nonprime borrowing amid industry affordability challenges, Fifth Third is staying in the prime customer sector, Sias says. Instead, Fifth Third is focused on growing its prime borrowing through geographic expansion.

In this episode of the “Auto Finance News Podcast,” Senior Associate Editor Aidan Bush and Sias dive into the shift toward longer-term loans, refinance opportunity, AI use cases and Fifth Third’s dealer finance strategies following its acquisition of Comerica Bank.