Dealerships Adjust to Digital Financing

By Laura J. Bacon August 02, 2022
Locking in financing before arriving at the dealership saves time and less time at the Dealership makes customers happy. Locking in financing before arriving at the dealership saves time and less time at the Dealership makes customers happy.

Cox Automotive recently released a study about the steps buyers take when financing cars. It showed that more buyers are turning to the Internet to figure out how to pay for their new cars. Studying more than 3,000 buyers who used the Internet for help with the buying process, Cox found that almost 90% of them looked at financing options online.

Soon, dealer customers may walk into your dealership with financing already arranged. While only 29% of the surveyed shoppers applied for financing online, a whopping 96% said that they were willing to do so. Not surprising, that number was even higher among the younger set. Additionally, these Internet-savvy folks were more likely to choose from financing sources with which they had a pre-existing relationship. Of those surveyed, 71% had first considered a financing source with which they previously worked. More than half of these buyers had a savings or checking account with their first-choice creditor, and nearly half prioritized a creditor that they previously used to buy a car.

So, more and more shoppers are looking online at their financing choices, and more than two-thirds of these prospective buyers are showing loyalty to a creditor that they used before. What is this going to mean for your back office if most of your buyers walk in with a direct loan check already in hand? Only time will tell, but this might be the perfect opportunity to consider what your F&I process looks like. The biggest financing concerns for the surveyed buyers were interest rates (76% compared interest rates online) and monthly payments (86% calculated what their payments would be). Additionally, while Generation Z and Millennial buyers are more likely to go online, they also need more guidance to understand the financing process—nearly half of these shoppers said that they wanted assistance to explain the transaction.

Another bright spot for dealers is that these consumers expressed higher satisfaction levels overall with their purchases and were happier with how long they spent at the dealership. One of the enduring customer complaints about car buying is the time it takes, and those who applied for financing or signed their paperwork before they arrived at the lot saved more than half an hour. Concerns about time at the dealership could also explain why so many buyers surveyed were willing to complete the entire car purchase online—76% were open to a completely online transaction with a dealer, and just under half said they'd buy online directly from a lender.

The digital car-buying revolution isn't on its way—it's clearly already here and only going to grow. It'll be more and more important for you to understand where your customers are and figure out how to meet them there. Take advantage of these shoppers' desire to have someone help them through the buying and financing process, make sure you have a way to communicate that you've got competitive rates and payment options, and continue to make their trip to your dealership as quick and easy as you can. 

 

*Laura J. Bacon is an associate in the Maryland office of Hudson Cook, LLP.

©CounselorLibrary.com 2020, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only to Used Car News.

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Last modified on Tuesday, 16 August 2022 18:09