LOS ANGELES -

Extending the contract term length by 12 months meant consumers spent an extra $1.4 billion on new vehicles in November. That’s the calculation by Requisite Press, which also shared its November Auto Buyer’s Affordability Index (ABAI) this week.

Requisite Press reported an index reading of 53.0, indicating that a prudent, median-income household can only afford 53.0 percent of the new-vehicle average price.

In a survey of new-model buyers who utilized long-term financing, Requisite Press found that nearly half of the buyers used the longer terms to purchase more expensive vehicles. At November prices, buyers who financed with a six-year loan instead of five-year loan could spend an additional $6,016 while keeping payments the same.

Given the November sales volume, long-term loans enabled extra spending of more than $1.4 billion, according to the study.

Requisite Press fears that consumers with a lifetime of long-term loans could see a reduction in retirement savings of more than $140,000.

In a survey of buyers conducted last month using Google Consumer Surveys, Requisite Press found that nearly half (46.3 percent) of purchasers who had taken out a long-term loan (61 months or longer), would have selected a less expensive vehicle if limited to a 60-month loan.

Based on the November average transaction price of $30,445, Requisite Press president Phil Kelton calculated that buyers choosing a 6-year loan versus a 5-year loan were able to commit to an additional $6,016 in total cost while keeping payments the same.

Assuming current auto financing trends for loan term and the survey results, along with the November sales volume, the study determined that the total increase in spending due to long-term loans was more than $1.4 billion.

“The numbers are big when taken in aggregate, but the damage is done at a personal level,” Kelton said. “A lifetime of using long-term loans to boost spending, results in a lot less retirement savings — clearly a hit to family financial security.”

Based on a lifetime of buying eight cars with six-year loans (each with $6,016 of extra spending), a conservative 5 percent rate of return, and a retirement age of 67, Kelton computed the reduction in retirement savings would be more than $140,000.

He added that figure grows to more than $250,000 when seven-year auto loans are considered.

The November ABAI of 53.0 is based on a median household income of $53,713, a light-vehicle average transaction price of $30,445, and adherence to the auto financing rule consisting of a minimum 20 percent down payment, a maximum 4-year loan term and monthly payments of no more than 10 percent of gross household income. This equates to an affordable monthly payment of $318 and price of $16,143.

According to the third-quarter data from Experian Automotive, consumers aren’t necessarily adhering to that advice. Experian pegged the average new-vehicle loan term at 66 months with a monthly payment of $470 while tagging the average used-vehicle terms at $358 for 62 months.