Just like car buying itself, online financing is ramping up. Right now, the amount of buyers choosing online financing is still below 30 percent. But the interesting part is that of those surveyed, 96 percent who financed online liked it better than sitting in the finance officer’s room at a dealership while purchasing a new car. This predicts the likelihood of changing the car-buying experience going forward.
What determined how buyers felt about online financing?
A survey was conducted by Cox Automotive, of car buyers who sought financing online. Remember, 85 percent of new car purchases, and almost 40 percent of used cars involve financing. It measured buyer satisfaction after doing the initial steps online, as well as those who finalized their financing. Basically, the survey broke down online financing versus the traditional method of doing it at the dealership.
Cox surveyed over 3,000 buyers who either purchased a new or used car within the past year. Of that group, 2,116 bought a new car, and 934 purchased one used. The survey took place in the latter part of 2021. It is called the Cox Automotive Car Buying Financing Journey Survey.
How many chose financing online?
The first thing it found was that most of the respondents did their homework from home before ever stepping foot into a dealership. That time included researching options, securing the financing, and signing all of the paperwork. About 70 percent looked at two or more financial institutions before picking one.
Most respondents had a relationship with the lender they finally chose. They had positive responses about their car buying and financing as a result. But not all of the reasons.
On average it takes 42.9 weeks of income to purchase a new car. A typical monthly payment is now $691. That is the most it has ever been.
What were some of the advantages of financing online?
One of the most helpful aspects of financing online is that buyers could more accurately estimate their monthly payment options. In all, buyers took more time sorting out financial details online than the time they spent in the dealership.
Of those that got their financing online, most saved close to 40 minutes at the dealership. And this translated to their overall satisfaction with their dealership experience. Digital car buyers said they had a much more pleasant experience.
“Our industry is well past wondering if consumers will ever buy a car online,” Andy Mayers, associate vice president of operations at Cox Automotive, told PR News. “This time has come, and the research indicates a solid growth trajectory. The auto financing industry needs to be prepared by implementing digital strategies that increase operational efficiency. And enable consumers to find, finance, and finalize their next vehicle purchase when, where, and however they prefer.”