FICO auto financing survey reinforces importance of dealerships
U.S. consumers are going online in droves to acquire everything from nail polish to holiday knickknacks. Their propensity to do the same to secure auto financing isn’t quite at the same level, according to a global consumer survey on automotive finance experience released on Thursday by FICO.
Silicon Valley analytic software firm FICO on Thursday announced the findings of its first global survey on consumer perceptions of the automotive finance process. 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.
A trio of initial findings showed:
• Only 5 percent of U.S. consumers applied for their loans online, while 29 percent plan to do so for their financed installment contract.
• Seventy-three percent of U.S. consumers obtain their financing at the dealership; more than any other country.
• The U.S. has the second longest wait time to complete the finance process as 62 percent of U.S. consumers have to wait 30 minutes or more.
“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 at GM Financial.
FICO highlighted that among the key findings is a sizable gap between a consumer’s interest in online auto financing (33 percent) versus current global market adoption (10 percent). In the United States, there is a 24-point difference, as only 5 percent of U.S. consumers applied for their financing online, while 29 percent plan to do so for their next purchase.
Also, in the U.S., FICO noticed that more than any other country surveyed, the dealership is still the main channel for U.S. consumers as 73 percent finance their vehicle purchase at the dealership.
FICO acknowledged consumers appreciate immediacy in their financing process. The survey showed 87 percent would accept or at least consider an instant 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 financing transaction — from filling out the application, to receiving an offer and finalizing the loan.
The percentage of U.S. 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 U.K. has the shortest wait time for the financing 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 gives customers more control over the auto buying process,” said Ken Kertz, senior director and practice leader of auto and motorized at FICO.
Other data points of note for the U.S. included:
• Financing has a meaningful impact on the effectiveness of marketing to auto shoppers. FICO noticed 67 percent of participants said that the level of financing they qualified for had some or a great deal of impact on their selection of a vehicle, make, model or dealership.
• There are generational differences in auto financing. FICO found that baby boomers strongly prefer going to a dealership, and millennials prefer going to a bank. In general, younger consumers are more likely to seek digital financing, however, is not the first choice for the majority of any age group.
• Monthly payments and interest rates are most important when considering competing options. The findings indicated consumers care most about low monthly payment amount (92 percent) and interest rates (94 percent) and are willing to put more money down as a trade-off.
• Overall, consumers are fairly satisfied with their experience. FICO said 87 percent of respondents felt they got a good or excellent deal, and the clear majority of consumers around the world feel that they are receiving at least a fair deal in during their financing experience.
FICO’s independent research surveyed 2,200 adult consumers across nine countries including the U.S., Canada, Mexico, Chile, Australia, New Zealand, Germany, Spain,and the United Kingdom. The respondents were between the ages of 18 and 64 who acquired financing for a new or used vehicle within the last three years.
More information on the survey results can be found at this website.