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FICO Survey: Auto Dealership Financing Holds Strong Among Consumers while Online Loans Gain Traction

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Surveys & Market Data

SAN JOSE, Calif. — March 13, 2019

Highlights of Findings in FICO’s 2019 U.S. Consumer Survey of Vehicle Finance Perceptions:

  • 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%).
  • Consumers care most about their monthly payment (92%), length of loan term (90%), and interest rate (87%).

Silicon Valley analytics software firm, FICO, today announced the findings of its second annual global survey on consumers’ perceptions of their vehicle financing experience. 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.

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.

While dealership financing continues to be the preferred loan option, online loans are gaining traction, which is being driven by the changing consumer expectations. Consumers cited the following top factors for financing options:    

  • For online financing, consumers most valued: 1) convenience, 2) comparison shopping across lenders, and 3) speed.
  • For dealership financing, consumers most valued: 1) one-stop shopping, 2) possible promotions and discounts, and 3) a tie between feeling they might get a better deal and that’s how financing was secured last time.
  • For bank or financial institution financing, consumers most valued: 1) trusting and liking their bank, 2) believing they get the best rate at their bank, 3) negotiating power.

“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,” said Ken Kertz, senior director and practice leader, Auto & Motorized at FICO.   “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. 95% of consumers would consider only between one to three lenders. They care most about their monthly payment (92%), length of loan term (90%), and, interest rate (87%). 

Other Significant Findings:

  • 48% of consumers considered only one lender, and 47% considered two to three lenders.
  • The majority of consumers (78%) have to initiate their financing discussions today.
  • 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.
  • The U.S. had the lowest percentage of loans for a new vehicle at 48%, compared to 61% globally.
  • 68% of U.S. consumers rated the financing experience as easy, which tied for the second lowest ranking in surveyed countries behind New Zealand’s 66%, with the global average at 74%.

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 3 years.

More information on the survey results can be found at: https://www.fico.com/en/latest-thinking/ebook/usa-2019-global-consumer-survey-vehicle-finance-perceptions

About FICO
FICO (NYSE: FICO) powers decisions that help consumers and auto finance lenders come together. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational and customer facing decisions. FICO holds more than 190 US and foreign patents on technologies that increase profitability, customer satisfaction and growth in many industries including lending.  Using FICO credit risk lifecycle solutions and advanced analytics, auto lenders can accelerate their marketing, acquisition, customer management, financial crime prevention and analytics strategies to add value to their bottom line.

Learn more at https://www.fico.com

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Media Contact:
Greg Jawski
Porter Novelli for FICO

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