The Cox Automotive Car Buyer Finance Journey Study is based on an online survey of 3,050 consumers who financed the purchase or lease of a new (2,116) or used (934 ) in the past 12 months. To be eligible, respondents had to be at least 18 years old and use the internet during their shopping process. The survey was conducted from Oct. 7 to Nov. 16, 2021.
Five Takeaways from the Car Buyer Finance Journey Study
This in-depth study measured buyer satisfaction with the vehicle financing steps taken, including the lender selection process and the resources used to obtain vehicle financing. Additionally, the research revealed the financing steps consumers take online versus in-person, as well as their comfort level and concerns with financing online. Here are five takeaways from the inaugural study:
- Car buyers spend a lot of time financing vehicles. Almost all (87%) car buyers explored their financing options before heading to a dealership. More than a third of the time spent in the car buying process is spent on financing activities. Of the 12 hours and 19 minutes spent buying a car, 4 hours and 23 minutes are spent researching financing options, obtaining financing and signing the contract.
- Strong relationships matter. The study showed that 70% of car buyers considered two or more lenders before deciding on one, and many had an established relationship with the lender they considered first. Buyers who were mostly digital—meaning they completed more than 51% of the steps in their car buying journey entirely online—are more loyal to their lenders, translating through more direct financing and greater loan satisfaction. “I trust this lender” was the top reason given by most digital buyers for choosing a lender.
- Vehicle affordability is paramount. According to the last Cox Automotive/Moody’s Analytics Vehicle Accessibility Indexthe median weeks of income needed to purchase the average new vehicle in March was 42.9 weeks, and the estimated typical monthly payment increased to $691, a record. The study found that monthly payments and interest rates were considered the most useful information: 86% of buyers estimated their monthly payments and 76% compared interest rates.
- Digitization has a positive impact on time spent and satisfaction. Most digital buyers spent more time researching and obtaining their loans online and less time at the dealership. Buyers who applied for finance online saved 30 minutes at the dealership, and those who signed documents online saved 38 minutes. Both groups of primarily digital buyers reported that they were more satisfied with time spent at the dealership.
- Many buyers are open to buying a vehicle entirely online. More than three-quarters of survey respondents said they were open to buying a car entirely online, and 47% said they were open to buying a car entirely online with a lender.
Another interesting insight from this new study is that while different generations are similar in their willingness to apply for financing online, their need for assistance from a dealership or lender during the process varies. While younger generations – Gen Z and Millennials – are the most likely to apply for financing online, almost half prefer assistance. If they understand how digital lending works, young buyers need a specialist to guide them and explain the steps of the transaction. By contrast, baby boomers are only slightly less likely to apply for finance online, and when they do, only 38% say they prefer assistance.
“Our industry no longer wonders if consumers will ever buy a car online,” said Andy Mayer, lender solutions strategist and associate vice president of operations at Cox Automotive. “That time has come, and research indicates a solid growth trajectory. The auto finance industry must 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 how they prefer.”
To know more, download study highlights and register to attend American Financial Services Association (AFSA) Business Partner Webinar, Vehicle Financing in the Era of the Digital Consumer, on Thursday May 26to 2 p.m. EDT. Mayers will be joined by Angela DrakeSenior Research Director at Cox Automotive, to delve deeper into the buying/financing psyche of consumers and how lenders should strategically position their organizations for the fundamental shift to fully online vehicle retailing.
Context and methodology of the study
Cox Automotive has researched car buying process for 12 years and delves into the financial side of the car buying process for the first time. The Cox Automotive Car Buyer Finance Journey Study is based on an online survey of 3,050 consumers who financed the purchase or lease of a new (2,116) or used (934 ) in the last 12 months. To be eligible, respondents had to be at least 18 years old and use the internet during their shopping process. The survey was conducted from Oct. 7 to Nov. 16, 2021. This vast study measured consumer satisfaction with the steps taken and the resources used to obtain automobile financing. The research identified the lenders considered and used in addition to covering the lender selection process. This study determined what actions consumers take when financing online versus in-person, as well as their comfort level and concerns with financing online.
About Cox Automotive
Cox Automotive Inc. makes it easier for everyone to buy, sell, own and use vehicles. The 27,000+ team members and global company family of brands including Autotrader®, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto® and Xtime®, are committed to helping millions of car buyers, 40,000 automotive dealership customers across five continents, and many more in the automotive industry prosper for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately held, Atlantabased in New York with annual revenues of nearly $20 billion. www.coxautoinc.com
SOURCE Cox Automotive