Potential car buyers prefer to sort out financing options before going to a dealership, says a recent customer sentiment survey by CarGurus, a worldwide automotive marketplace.
In this inaugural survey, CarGurus probed consumers’ perceptions of the various facets of vehicle financing.
Almost all shoppers surveyed (93%) believe it would be useful to go into the dealership already prequalified for a loan, according to a press releases from CarGurus. Another 68% said it would give them more confidence at the dealership, while 66% indicated they liked the option because they could complete more of the research beforehand.
“Our research found that consumers are eager to purchase a vehicle in a similar fashion to buying a home, and they want know more about financing for this major purchase in advance instead of treating it as an afterthought,” Madison Gross, director of customer insights at CarGurus, said. “According to the study, there is also a lot of room to educate consumers on the general ideas around automotive finance, which should ultimately provide a better shopping experience for both consumers and dealerships.”
For example, only 2 out of 3 car shoppers surveyed knew that loan prequalification was an option, and only 50% of participants who recently financed a car purchase went to the dealer prequalified.
The desire to do most of the legwork before getting to the dealership may be growing as a result of COVID-19, according to Gross.
“In other studies, we have noted that interest in completing some or all of the auto purchasing process online has increased sharply as a result of the pandemic,” Gross told Mega Dealer News. “So far, that increased level of interest has sustained, and it may be a more permanent shift in consumer preferences going forward.”
When probing automotive financing knowledge among consumers, the survey found nearly half (45%) believe most of a dealership’s profits are driven by the price of their vehicles, while auto loans were the critical factor for 30%.
In what mattered the most to buyers looking to take out a loan, monthly payment and interest rate came out equally important, both at 37%, according to the survey. The total amount paid over the life of the loan came in second at 18%, while only 7% found the loan’s length most important.
“Auto financing is complicated: the down payment, interest amount and length of the loan all impact the monthly payment amount and the total amount paid over the life of the loan,” Gross said. “Auto loan literacy is about balancing all of these factors and making the best, most informed decision.”
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