Auto Dealership Financing Holds Strong Among Consumers while Online Loans Gain Traction
A recent survey from analytics software firm FICO found that 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%).
The survey also found that 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.
This isn’t really that surprising, since dealer financing is a convenient option for consumers – particularly those that aren’t well prepared before they shop for a vehicle.
Savvy buyers know that it pays to shop for financing, and get pre-qualified, before setting foot in a dealership.
Even savvier buyers know that credit unions offer some of the best deals on new and used vehicle financing.
While online loan shopping provides a fast and easy means of comparing rates, consumers shouldn’t leave out the best “offline” options. These usually include local credit unions.
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