There is huge customer support for going digital when it comes to getting financing, according to a car buyer financing journey study by Cox Automotive. Though less than 30 per cent of buyers actually used online financing, 96 per cent of the people who were surveyed were willing to. Those who did key aspects of their financing online felt they saved time and had an overall better deal.
Based on a 2021 online survey of 3,050 consumers who financed the purchase or lease of a new or used vehicle in the past 12 months, the extensive study measured buyers’ satisfaction with the vehicle financing steps taken, including the lender selection process and resources used to obtain vehicle financing.
Here are five takeaways from the inaugural study:
- Car buyers spend significant time on vehicle financing. 87 per cent of car buyers researched their financing options before visiting a dealership. Over a third of the time spent in the car-shopping process is dedicated to financing activities.
- Strong relationships matter. 70 per cent of car buyers considered two or more lenders before choosing. Buyers who were mostly digital, (meaning they completed more than 51% of their car-buying journey steps completely online), have stronger loyalty to their lenders, resulting in more direct financing and higher loan satisfaction.
- Vehicle affordability is paramount. Monthly payments and interest rates were considered the most helpful information—86 per cent of buyers estimated their monthly payments and 76 per cent compared interest rates.
- Digitization positively impacts time spent and satisfaction. Mostly digital buyers spent more time researching and securing their loans online and less time at the dealership. Buyers who applied for financing online saved 30 minutes at the dealership, and those who signed paperwork online saved 38 minutes. Both groups of mostly digital buyers indicated that they were more satisfied with the time they spent at the dealership.
- Many buyers are open to buying a vehicle completely online. More than three-quarters of the study respondents stated that they were open to buying a car completely online, and 47 per cent said they were open to buying a car completely online from a lender.
Another interesting insight from this new study is that although different generations are similar in their willingness to apply for financing online, their need for assistance from a dealer or lender during the process varies. While younger generations—Gen Z and millennials—are the most likely to apply for financing online, nearly half prefer assistance.
While they understand how digital lending works, younger buyers need a specialist to guide them and explain the stages of the transaction. On the other hand, baby boomers are only slightly less likely to apply for financing online, and when they do, only 38% state that they prefer assistance.