It doesn’t take a survey to prove that today’s consumers want to do everything online. From food to furniture, houses and cars, shoppers like the empowerment that comes from the online marketplace.
That’s increasingly true for car loans.
As the head of an online financing company, I see it every day through our business. The question isn’t whether consumers want to shop for a loan online, but what the impact of that preference is, not only on the customer but on their view of the dealership. So, at SpringboardAuto, we fielded a survey that asked consumers to compare their perception of the dealership experiences with and without access to online financing.
As expected, the survey confirmed overwhelmingly that, indeed, consumers do want to finance online – a whopping 86 percent and that those customers, who arranged their financing online were, as a result, far more inclined (133 percent) to give dealers a 5-star rating and nearly twice as likely to return for service visits.
The findings underscore a trend in automotive lending that is already changing the way many dealership managers look at F&I: customers are happier and more responsive when they can complete financing online, before visiting a dealership.
Who Doesn’t Like Happy Customers?
What’s especially interesting is that all this customer happiness translates into dealership joy as measured by a more positive CSI score. It also boosts retention, and leaves customers with a sunny impression of the experience. More than anything else, the reasons have to do with options that lead to empowerment, the ability to arrange financing at their own pace – and with the vendor of their choice.
To that end, today’s technology has opened multiple platforms that help people get approved faster and more easily. Yes, dealership financing is still a vital and important part of the process, but now there are more solutions, and more opportunities, to get the deal done in a more accommodating and personal way.
And let’s face it: arranging financing at the dealership can make buyers, well, unhappy. According to our survey, 84 percent found the dealership financing experience frustrating and time-consuming, with only 16% reporting positive feelings of convenience.
This indicates that more than eight out of 10 car buyers who finance through a dealership F&I department are unhappy when they leave the process, which isn’t exactly healthy for CSI or a dealership’s service drive.
The Confidence and Convenience of Online Financing
That’s important, because when customers are happy they repay dealerships in product sales, service visits, loyalty, and referrals. Simply, they come back. That’s changing things, and expanding choices, but it’s also boosting confidence: customers fearful of being rejected at the dealership now have options to help secure financing.
How big an issue is this? Over 80 percent surveyed said concerns about their credit score held them back from financing via a dealership in the past, either because they were unsure about getting approved, had no idea what the payments would be, or were afraid of rejection.
Look at it this way: if you were rejected for a loan at a dealership, how likely would you be to ever come back through those doors?
Ultimately, though, the most significant aspect to the shift in online finance is convenience, as defined by speed, ease, and transparency. For example, when asked to compare in-dealership financing to online financing, a majority of those we surveyed said the finance experience online was faster, easier, more pleasant and hassle-free. That compares favorably to a car loan made the traditional way, with massive amounts of paperwork. That’s a commitment the typical busy customer is no longer willing to put up with. The numbers tell the story very vividly: 92 percent said that working with an online financing platform was easier, more pleasant and hassle-free than their previous dealership finance experience.
The Practical Benefits of Happy Online Financing
To be sure, online financing is changing the way dealerships think about and approach F&I. But it’s an ongoing process, an evolution of best practices that include all aspects of financing. What is clear, however, is that there’s an almost immediate benefit to dealers when customers finance online. In essence, happy customers seem to want to reward dealers by buying more products and services.
What could be better than happy customers with multiple options for financing, and many solutions that fit their needs? That’s a recipe for ongoing sales and service, to be sure. In the ongoing evolution of car buying, online financing might just make the biggest difference of all.