In November 2020, CarGurus surveyed 754 shoppers on their understanding of auto financing. Overall, the study found that shoppers want access to more financing information earlier in the shopping journey and they value being able to start the process online. Addressing the shift towards online financing will ultimately provide a better shopping experience for both consumers and dealers. Here are some of the key takeaways – and you can read the detailed findings here.
Shoppers want to shop with real rates in hand
The #1 pain point shoppers listed when it came to auto financing was a fear of rates not being “real” or changing. 42% of shoppers wish they could see the monthly payment they would be paying during the online shopping phase. According to consumers, both monthly payments and interest rates are by far the most important factors when it comes to evaluating a car loan. Only 18% consider the total price paid as the most important.
Key takeaway: In order to help ease shoppers’ fears, offer more rate transparency to financially prepared and ready-to-buy shoppers earlier in the shopping process.
The in-dealership financing experience can be daunting
In addition to wanting to shop with real rates, shoppers also indicated that the financing room is still a dreaded part of the car buying journey. Top concerns include being afraid that the dealer’s terms won’t be fair (37%), fear that the process will take too long (34%), and difficulty understanding loan terms (25%). Almost half of recent purchasers report spending over an hour talking financing for their auto purchase at the dealership (42%). Additionally, two-thirds of shoppers find value in taking care of more of the car shopping process before they step foot in the dealership, particularly in the form of pre-qualification.
Key takeaway: Save time for both your staff and the shopper by providing more financing resources online, identifying pre-qualified leads that come through your CRM, and preparing customer information in advance of their arrival at the dealership.
Interest in pre-qualification is growing, despite a gap between awareness and adoption
The fact that more parts of the car researching, shopping, and purchasing journey are moving online is not a new story, but Covid-19 has certainly accelerated that trend in a significant way. Consumers are reporting an increasing preference for pre-qualifying online. 93% of shoppers see value in doing it, yet only half of those who recently purchased and financed actually pre-qualified in advance. However, those who will be purchasing in the next year report much higher likelihood to pursue pre-qualification, with 69% of them pledging their intent to do so. At CarGurus, we’ve seen how valuable these pre-qualified leads can be – our latest data shows that these leads are 60% more likely to purchase, and close faster.*
Key takeaway: Prioritize pre-qualified leads and customize your outreach plan. Check out additional best practices for harnessing the power of pre-qualified leads here.
While there is still room to increase shopper education and awareness around auto financing literacy, it’s a topic that is likely to become increasingly relevant in the months to come. As the retail environment returns to a more normal state, consumers’ increasing preference for online financing resources and tools is a key area within digital retail where you can help facilitate a more seamless online to in-store experience that benefits both your staff and your shoppers alike.
CarGurus Consumer Financing Study, November 2020 [N=754] All survey respondents were considered in-market car-shopper that either financed or are at least considering financing their purchase.
*CarGurus financing leads compared to non-financing leads, with IHS dealer close rates, Q1 2019-Q2 2020