ATLANTA, July 27, 2015 /PRNewswire/ -- According to a national survey commissioned by Carvana, 71 percent of consumers who have ever taken out an auto loan are not aware of the total dollar amount of interest spent on their last loan, and 69 percent do not understand what a one percentage point reduction in their rate would save them. To help car buyers better understand the impact of interest rates on the total cost of auto loans and identify a fair rate for their purchase, Carvana, the first complete online auto retailer and Forbes' fifth Most Promising Company in America, introduced today its Fair Compare Interest Rate tool.
The latest transparency product from Carvana allows consumers to determine the average interest rate they should pay for a loan based on their personal credit score, the vehicle price and the state in which they live. The tool's data is driven by Experian, a leading automotive data provider, and is derived from millions of actual consumer interest rates for loans. In addition to informing consumers on a fair interest rate, the product also compares it to the average interest rate available from Carvana. This comparison enables users to see how different interest rates directly affect both the monthly payment and overall dollar savings over the life of the auto loan.
A closer look at the results from the survey, conducted online on Carvana's behalf by Harris Poll of more than 2,000 U.S. adults, finds that among those who have ever taken out an auto loan, knowledge of the total amount paid on their last loan, or the potential for savings, varies slightly across age, gender and income levels. However, the majority of these consumers are still in the dark when it comes to the importance of shopping around for the lowest possible rate. A few examples:
- 68 percent of those with a college degree or higher do not know the total amount of interest they will owe/owed on their most recent auto loan
- Amongst those households earning less than $50,000 a year, 77 percent are also in the dark on the total cost of their loan
- 81 percent of millennial females (ages 18-34) could not answer how much money they could have saved if they were able to reduce their current/previous auto loan interest rate by one percentage point
"It is clear that car buyers have a lack of understanding surrounding interest rates. We are solving that by bringing transparency to another step in the car buying process. Whether a consumer is purchasing a vehicle from Carvana or through another channel, we want them to feel confident they are getting the best possible deal available," says Ernie Garcia, founder and CEO of Carvana. "Interest rates can add thousands of dollars to the final price of a car, and every percentage point matters. This new tool shows users one-on-one comparisons of which financing source can offer the best rate as well as the total savings, even if the Carvana rate isn't the lowest option available."
Similar to the company's vehicle price comparison tool, which compares Carvana's prices to the Kelley Blue Book® Suggested Retail Price, the new Fair Compare interest rate product leverages technology to put information and full control back into the consumer's hands.
For more information and to access Carvana's Fair Compare Interest Rate tool, visit www.Carvana.com/rates.
Based in Phoenix, Ariz., Carvana is the first complete online auto retailer that allows consumers to shop, finance and purchase a car entirely online, and have it ready for home delivery or pick-up at the nation's first vending machine as soon as the next day. The company is backed by more than $1 billion in revenue and more than 20 years experience in the secondary car market. All cars available on Carvana.com come fully covered with a 100-day or 4,189 mile bumper-to-bumper warranty and a 7-day "test own" return policy.
For further information on the Carvana car buying process, please visit www.carvana.com.
Note: This survey was conducted online within the United States by Harris Poll on behalf of Carvana from April 9-13, 2015 among 2,023 adults ages 18 and older (among whom 1145 have ever taken out an auto loan). This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Colleen Murphy at firstname.lastname@example.org.