Worried about higher interest rates? Tesla now offers car loans that you can pay off in 7 years.

Tesla. Inc. TSLA CEO Elon Musk has previously expressed concerns about the impact of rising interest rates on car purchases and raised the prospect of further reducing vehicle prices.

What happened: The company's website shows that the term of a loan from a Tesla financier or third-party lender will now be 36 to 84 months. The ceiling was previously 72 months.

This suggests that cash-strapped customers can now spread their payments over a longer period of time. Since March 2022, the Fed has been aggressively raising federal funds rates in the current tightening cycle.

But Tesla's updated payment plan has a downside: customers could pay more than the actual value of their car if they accept the extended term option.

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Why it matters: Thanks to successive and aggressive Fed hikes, interest rates are now at a 16-year high of 5% to 5.25%. To assess the impact of the rate hikes, the central bank agreed to a break at its June meeting.

The Fed's monetary policy arm, the Federal Open Market Committee, is due to meet next week to decide its monetary policy. The futures market has priced the probability of a 25 basis point rate hike at nearly 100% to 5.25%-5.50%.

Central bank officials, in public appearances, have continued to signal that more rate hikes may be on the horizon.

Musk has been critical of monetary policy and has in the past expressed concerns that the Fed is pushing the economy into a recession.

Tesla closed Friday's session down 1.10% at $260.02, according to data from Benzinga Pro.

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