FICO Survey: Auto Dealership Financing Holds Strong Among Consumers while Online Loans Gain Traction
- 13% of U.S. consumers acquired their most recent auto loan online, compared to only 5% in 2018, representing an 8% YoY increase for online financing.
- More than a quarter of consumers (28%) listed online financing as their first choice for their next automotive loan, increasing from current online borrowers (13%).
- Consumers care most about their monthly payment (92%), length of loan term (90%), and interest rate (87%).
The survey finds that there is a disconnect between consumers' finance preferences for current loans and consumers' finance preferences for future loans—with the largest gap centered on digital (nearly a 15-point difference). More than a quarter of consumers (28%) listed online financing as their first choice for their next loan, an increase from the number of current online borrowers (13%). Conversely, 63% of consumers applied for their current automotive loans from the dealership, but only 40% said dealership financing would be their first choice for their next automotive loan.
While dealership financing continues to be the preferred loan option, online loans are gaining traction, which is being driven by the changing consumer expectations. Consumers cited the following top factors for financing options:
- For online financing, consumers most valued: 1) convenience, 2) comparison shopping across lenders, and 3) speed.
- For dealership financing, consumers most valued: 1) one-stop shopping, 2) possible promotions and discounts, and 3) a tie between feeling they might get a better deal and that's how financing was secured last time.
- For bank or financial institution financing, consumers most valued: 1) trusting and liking their bank, 2) believing they get the best rate at their bank, 3) negotiating power.
"With the accelerating adoption of digital, our findings suggest that the US, as well as the global market, may be reaching a tipping point where the shift to digital happens rapidly given consumer expectations and the availability of new technology," said
Currently, the majority of the consumers (78%) are initiating automotive loan discussions. 95% of consumers would consider only between one to three lenders. They care most about their monthly payment (92%), length of loan term (90%), and, interest rate (87%).
Other Significant Findings:
- 48% of consumers considered only one lender, and 47% considered two to three lenders.
- The majority of consumers (78%) have to initiate their financing discussions today.
- 91% of consumers would accept (or at least consider) an instant vehicle loan offer if that meant they could avoid dealing with a bank or doing extra paperwork.
- The U.S. had the lowest percentage of loans for a new vehicle at 48%, compared to 61% globally.
- 68% of U.S. consumers rated the financing experience as easy, which tied for the second lowest ranking in surveyed countries behind
New Zealand's 66%, with the global average at 74%.
FICO's independent research surveyed 2,000 adult consumers across nine countries, including the US,
More information on the survey results can be found at: https://www.fico.com/en/latest-thinking/ebook/2019-global-consumer-survey-vehicle-finance-perceptions-usa
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SOURCE FICO
Greg Jawski, Porter Novelli for FICO, 1-212-601-8248, Greg.jawski@porternovelli.com