The proportion of US consumers acquiring their most recent auto finance online has risen significantly, according to recent research.
According to analytics firm FICO 13% of US consumers acquired their most recent auto loan online, compared to only 5% in 2018, representing an 8% year-over-year 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 key issues for consumers are ranked as their monthly payment, cited by 92%, length of loan term (90%), and interest rate (87%).
The research looked at how consumers view the financing of their new and used vehicle purchases, as well as how vehicle finance companies are currently meeting customer expectations.
It identified 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).
Almost two thirds (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.
Consumers valued the convenience, comparison shopping across lenders, and speed when it came to online financing.
In contrast, for dealership financing, consumers most valued one-stop shopping, possible promotions and discounts, and a tie between feeling they might get a better deal and the fact that is how they secured finance for their previous car purchase.
Ken Kertz, senior director and practice leader, auto & motorized at FICO said: “With the accelerating adoption of digital, our findings suggest that the US, as well as the global market, may be reaching a tipping point where the shift to digital happens rapidly given consumer expectations and the availability of new technology.
“Consumers want simplicity and transparency whether financing online or at the dealer, and need to trust the process. Consumers will have a stronger say in how, where and who they do business with, and will greatly influence the emerging business models available today.”
Currently, the majority of the consumers (78%) are initiating automotive loan discussions.
Most (95%) of consumers would consider only between one to three lenders, while half (48%) considered only one lender, and 47% considered two to three lenders.
Almost all (91%) of consumers would accept (or at least consider) an instant vehicle loan offer if that meant they could avoid dealing with a bank or doing extra paperwork.
FICO’s independent research surveyed 2,000 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 or lease on a new or used vehicle within the last three years.