US auto-financing market needs a faster, better digital experience
People love shopping online, and yet, when it comes to getting a car loan, a majority of us just go to a dealership instead of applying for one on the internet.
According to a survey conducted by FICO, the silicon valley analytics software firm, only 5 percent of US consumers applied for their loans online while 29 percent planned to do so for their next auto loan.
The research looked at how consumers view the financing aspect of their auto purchase for new and used vehicles, as well as how the ecosystem of providers (banks, captive finance providers, credit unions, dealerships, and startups) are currently meeting customer expectations.
“FICO’s research provides valuable insight into the auto finance experience for consumers. As a customer-centric organization, GM Financial puts our customers at the center of everything we do. The results of the research are a great validation that lenders and their dealers must be relationship-focused throughout the customer journey,” said Bob Beatty, executive vice president for North America Customer Experience, GM Financial.
Findings suggest that consumers appreciate immediacy in their loan process.
Eighty seven percent said that they would accept or at least consider an instant loan offer for financing a vehicle if that meant they could avoid dealing with a bank or doing extra paperwork.
However, globally, 54 percent of consumers wait 30 minutes or more to complete their loan transaction— from filling out the application, to receiving a loan offer, and finalizing the loan.
The percentage of US consumers who have to wait that long is higher at 62 percent, which makes it the second highest country, behind only Mexico at 65 percent. In contrast, the UK has the shortest wait time for the loan process with 63 percent waiting less than 30 minutes.
“The survey results underscore that consumers expect more transparency, personalization and timeliness. There is tremendous opportunity for the industry to move beyond transactional relationships into a long-term, customer-centric relationship by providing personalized experiences that give customers more control over the auto buying process,” said Ken Kertz, senior director and practice leader, Auto & Motorized, at FICO.
Among the key findings is a sizable gap between a consumer’s interest in online auto loans (33 percent) vs current global market adoption (10 percent).
In the United States, there is a 24-point difference; only 5 percent of US consumers applied for their loans online while 29 percent plan to do so for their next loan. In the US, more than any other country surveyed, the dealership is still the main channel for US consumers, 73 percent finance their auto purchase at the dealership.
8 June 2023