That’s one of the findings of Cox Automotive’s first car buyer financing journey study. Cox Automotive, the parent company of Kelley Blue Book, has studied the car buyer’s journey for 12 years to understand what car buyers experience and what matters to them. This year, the researchers expanded the study to dig deeper into the funding process.
The researchers surveyed more than 3,000 people who had financed the purchase or lease of a new or used car in the previous 12 months.
What they learned:
- Only 29% of buyers applied for financing online, although 96% said they were ready to do so.
- Those who obtained their financing online were more satisfied with their buying experience and spent less time at the dealership.
- Financing takes about a third of the time car buyers spend researching their purchase.
- The average buyer spent 4 hours and 23 minutes researching, applying and signing up for financing.
- Seventy percent of buyers considered at least two lenders, but buyers who conducted more of their buying process online were more likely to be loyal to a financial institution they had done business with before .
Different generations have different needs
Millennials and Gen Zers were more likely to seek financing online than older buyers. But they were also more likely to prefer assistance—nearly half wanted someone to walk them through the steps of the funding process. Boomers were less likely to complete their financing online, but when they did, only 38% valued the help.
Results match other studies, good trading tactics
The results match an important finding from the most recent version of the larger car buyer’s journey study. Last year, buyers were more satisfied the less time they spent at a dealership.
Obtaining financing online also simplifies the negotiation process once you arrive at the dealership. Dealerships will often try to get you to use their finance agreements. But agreeing gives them another tool to use against you in negotiations, as they can vary monthly payments and interest rates to convince you to pay more for your new car in the long run.
While there’s no harm in exploring if the dealership can beat your external financing offer, entering the negotiation with your financing already secured always gives you more options to make a deal that works for you in the long run. .