World-renowned analytic software organization, FICO, today announced the findings of its second annual global survey on consumer perceptions of the automotive finance process. The study looked at how consumers perceive the financing aspect of their auto purchase for new and pre-owned vehicles, as well as if the services and options offered by providers (banks, captive finance providers, credit unions, dealerships, and start-ups) are currently meeting customer expectations.
Key findings from the survey indicate that when it comes to auto financing, Canadians are most comfortable leaving it to the perceived experts. In fact, more Canadians sought financing directly from the dealership than any other participating country (66% versus 56% global average). In addition, Canadians were the least willing to seek financing online (9% versus 16% global average). Regarding future automotive loans, 17% of Canadians would consider using an online application process in comparison with 27% of global participants.
In accordance with the trends seen from last year’s survey results, globally, consumers continue to take a proactive approach to financing auto purchases. The survey showed that 73% of Canadian respondents initiated the financing discussion when purchasing a vehicle, with 27% responding to an offer from a company. While still relatively low, the numbers show that comparatively, Canadian consumers are responding to financing offers more than most other countries, only being surpassed by Germany (29%).
Additionally, Canadians were the most likely respondents to report only considering one financial lender before making their decision (70% versus 49% globally).
"In a time where many consumer decisions are being made independently online, when it comes to automotive financing, Canadians still want direction,” said Kevin Deveau, vice president and managing director, FICO Canada. “More than any other market, Canadian consumers are trusting dealerships to make them an offer, and in most cases, they don’t feel the need to shop around. This means there is an obligation and opportunity for financing providers to streamline their processes to ensure they can provide the right offers to customers, quickly, and without damaging relationships.”
Other data points of note for Canada:
• There’s always wiggle room – Cumulatively, 81% of Canadians negotiated at least a little bit on the terms of their lease or loan.
• Monthly payments trump APR – For Canadians, monthly payment amount was a more important factor than APR when deciding on automotive financing (93% and 90% respectively).
• Patience is a virtue – 52% of respondents said that it took less than 30 minutes to complete the financing transaction, while 48% took longer than 30 minutes, implying that there is still significant manual work that takes place during the financing process.
• Overall, consumers fully understand the terms of the financing and feel they got a good deal – 80% of Canadian respondents fully understand the terms of the financing (up from 76% last year). Further, the clear majority of consumers around the world feel that they are receiving at least a good deal in during their financing experience.
FICO’s independent research surveyed 2,000 adult consumers across nine countries including Canada, Australia, Germany, the U.S., Mexico, Chile, New Zealand, Spain, and the UK. The respondents were between the ages of 18-64 and had acquired a loan on a new/used vehicle within the last three years.