car buying

With the car buying journey becoming even more digital and remote, the car shoppers’ affinity for an in-person experience has barely wavered according to a new report. As well, financing remains a multi-faceted topic that can make or break a deal.

The Capital One 2021 Car Buying Outlook report analyzed the data from 1,000 buyers and 401 car dealers in an effort to identify key “behaviors, preferences, and attitudes” as they relate to auto financing. They found that in the midst of arguably the most challenging climate for car sales ever, the vast majority of car shoppers still want to conclude a vehicle purchase in person.

For respondents, buying a car from a dealership provides a level of comfort and security. Only 6% said they would be most comfortable buying a vehicle without a dealership’s involvement. Of those surveyed, 92% feel that a test drive is crucial before buying a vehicle and more than four in five will visit more than one dealer during their search.

Sanjiv Yajnik is the President of Financial Services at Capital One. He said, “For most Americans, buying a car is one of the biggest purchases they’ll ever make, so it’s not surprising that they want to see, feel and experience this investment for themselves in person, alongside a trusted dealer advisor. The future of car buying requires embracing a model that marries digital tools with physical experience, empowering customers to have the car buying journey they want.”

Guidance through financing a key role

The report also noted that financing their vehicle remains a contentious point in the process where dealership and customers may diverge slightly. Both dealers and car buyers both acknowledge that 68% of car deals fall through when financing is discussed, indicating that the “money talk” is an area that needs to be improved.

The financing conversation is seen from two different angles. Almost all dealers (99%) believe that less than half of shoppers have their financing planned when they visit the dealership, and that they need to educate customers on the process and terminology. Only 43% of shoppers expect to have discussions surrounding financing at the dealership.

From the other side, car shoppers (60%) believe that dealers have the digital tools to remove that hurdle, allowing customers to educate themselves on financing options prior to their visit – and they wish to do so. More than 80% of customers surveyed “agree dealerships should provide more information upfront about pricing and financing”, going back to the well on the need for transparency.

Digital tools prove their value to dealers

Although the benefits to shoppers are clear, dealers have been slow to adopt many of the advanced digital tools until the pandemic hit the US. After adoption, more than half have permanently adopted tech in some capacity. 69% acknowledge that increased technology and digitization will be a focal point post-pandemic.

Still, challenges with digitization remain for dealers. While the customer viewpoint about the website experiences have been documented well, dealers require significant investment in key areas. 38% know that their websites require innovation while 1 in 3 report that financing requires an overhaul. 42% of dealers state that “digitization will change their financing transparency in the next five years”.

This report implies that digitization for dealerships remains a priority, but the ultimate goal is still to have customers cross the threshold into the showroom to complete their purchase. Balancing the shoppers’ digital evolution with the traditional sales model promises to be a moving target going forward.

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