FICO commissions first global consumer survey on automotive finance experience
Only 5 percent of US consumers applied for their loans online while 29% plan to do so for their next auto loan
73% of US consumers obtain their loans at the dealership; more than any other country
US has the second longest wait time to complete the finance process; 62% of US consumers have to wait 30 minutes or more
Silicon Valley analytic software firm FICO today 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.
"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.
Among the key findings is a sizable gap between a consumer's interest in online auto loans (33%) vs current global market adoption (10%). In the United States, there is a 24-point difference; only 5% of US consumers applied for their loans online while 29% 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% finance their auto purchase at the dealership.
Consumers appreciate immediacy in their loan process. 87% 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% 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%, which makes it the second highest country, behind only Mexico at 65%. In contrast, the UK has the shortest wait time for the loan process with 63% 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.
Other data points of note for the US:
Financing has a meaningful impact on the effectiveness of marketing to auto shoppers - 67% 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 - 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 loan options - Consumers care most about low monthly payment amount (92%) and interest rates (94%) and are willing to put more money down as a trade-off
Overall, consumers are fairly satisfied with their experience - 87% 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 during their financing experience
FICO's independent research surveyed 2,200 adult consumers across nine countries including the US, Canada, Mexico, Chile, Australia, New Zealand, Germany, Spain, and the UK. The respondents were between the ages of 18-64 who acquired a loan on a new/used vehicle within the last 3 years.
FICO (NYSE: FICO) powers decisions that help consumers and auto finance lenders come together. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational and customer facing decisions. FICO holds more than 185 US and foreign patents on technologies that increase profitability, customer satisfaction and growth in many industries including lending. Using FICO credit risk lifecycle solutions and advanced analytics, auto lenders can accelerate their marketing, acquisition, customer management, financial crime prevention and analytics strategies to add value to their bottom line.