Ninety-three percent of people looking to buy a car think getting prequalified for a loan would be useful, but only 50 percent of buyers actually did it, a new survey found.
The top frustration for car shoppers was an inability to see monthly payment options when shopping for a car online, well before a dealer gets actively involved.
The study by website CarGurus asked 754 people who either have recently or will soon buy a new car for their thoughts on car financing, and found older (over 45), wealthier ($100,000-plus annual income) men felt the most prepared when it comes to car loans.
If automotive dealerships want to keep up with the changing ways Americans are buying cars, they might do well to make customer financing options clear and simple to understand. Because as it stands, a lot of potential car shoppers just don’t know enough about financing a new vehicle today, and shoppers want to learn more about car financing earlier in the shopping process.
These were some of the results of a new study conducted by CarGurus, which asked 754 people who either plan to buy a new vehicle in the next year or who had purchased one in the last two years their thoughts about financing options. These were also people who used outside financing to buy their car, or were considering using financing for the car they were thinking of purchasing.
Prequalification for a loan was a big deal for the people surveyed, with 93 percent of them saying that being prequalified would be useful and 68 percent said it would make them more confident when talking to the dealer. Two-thirds, 66 percent, said they wanted to complete more of the shopping process before setting out to visit the dealership. Despite those majorities in favor of prequalification, only 50 percent of buyers actually prequalified for financing before going to the dealer.
Wanting to be armed with information before talking to a car dealer was a key thread found throughout the survey, Madison Gross, director of consumer insights at CarGurus, told Car and Driver.
“When it comes to financing a vehicle, the number-one frustration is ‘wishing I could see the monthly payment while shopping for the car online before visiting the dealer,’ ” Gross said. “Since decisions about what car best fits a shopper’s needs are often made in tandem with budget considerations, one approach is to provide real, personalized rates and monthly payments during the vehicle selection process.”
The second-place frustration was a worry that any loan a dealer offered would not be fair, followed by a concern that the loan process would take too long and then a difficulty in understanding the loan terms. Shoppers looked at an average of 4.7 lending options before choosing one to finance their vehicle.
There were notable demographic differences in shoppers’ confidence levels, Gross said, which are unlikely to upend any stereotypes about men and car buying. The survey responders who said they felt somewhat or very prepared were more likely to identify as male, to be older than 45 years old, and to live in a household with annual income over $100,000 than those who felt very or somewhat unprepared.
Two aspects of a car loan tied for most important in the survey. Both the amount of the monthly payment and the loan’s interest rate mattered to 37 percent of car shoppers, while the total cost of the loan matters most to 18 percent of shoppers and the overall length of the loan mattered most to just 7 percent.
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