Bill Ford warns auto industry on 7-year car loans

Bill Ford Jr. on longer auto loans
Bill Ford Jr. on longer auto loans   

With the auto industry roaring back to life, the executive chairman at Ford Motor warned on Monday that lenders and consumers should not fall back on old habits.

"I think we have to be careful because we don't want to get into a situation like we did before, where consumers are over extended. That doesn't do anybody any good," William Clay Ford Jr., said on CNBC's "Squawk Box."

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His comments come at a time when six- and seven-year car loans are becoming more common, along with incentives and discounts to get people to buy vehicles. Lenders are also relaxing some of the most stringent standards adopted after the 2008 financial crisis.

"We've been relatively conservative at Ford about those types of things," Ford said.

Ford downgrade an opportunity: Bill Ford
Ford downgrade an opportunity: Bill Ford   

Ford, great-grandson of Henry Ford, also said he's encouraged by "the underlying strength" of the industry.

In August, automakers reported a 5.5 percent rise in U.S. sales from a year earlier. The seasonally adjusted annualized rate of sales rose to 17.53 million vehicles from 15.94 million a year earlier.

That was well above the 16.6 million forecast from analysts polled by Thomson Reuters and the highest rate since 17.6 million in January 2006.

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—By CNBC's Matthew J. Belvedere. Wire services contributed to this report.