Consumers are increasingly opting to skip the dealership when it comes to getting their next auto loan, according to fresh data from Fico.
Published last week, Fico’s 2019 U.S. Consumer Survey of Vehicle Finance Perceptions examined how consumers looked at the financing of their vehicle purchases and how auto finance companies are currently meeting their expectations.
While 63% of respondents had acquired their most recent auto loan or lease by visiting a dealership, only 40% said they would seek out an auto loan that way next time.
Meanwhile, 28% of consumers surveyed listed online financing as their first choice for their next auto loan, compared with 13% of survey respondents who had applied for their current auto loans online.
More than half of the respondents who preferred the online channel cited convenience as their primary reason; speed and the ability to “comparison shop” across auto lenders were listed as other top factors.
Online auto financiers, such as Carvana — which uses a purely online model aside from the car delivery — make the car-buying process more transparent and user-friendly, said Kroll Bond Rating Agency Managing Director Eric Neglia. “Carvana’s business model takes away a lot of friction that currently exists in the auto business now where a borrower does their research online and then has to walk into the store to purchase it from a dealer,” he said. “If you’ve ever purchased a vehicle, you know that it’s often a frustrating process where you can go through multiple layers of salesmen and management, the price is negotiated, and you can sometimes feel captive waiting for a final decision.”
