Study: Car Buyers Happier with Online Financing

By Sean Tucker 04/28/2022 9:00am

Facts about car financingApplying for financing may be the least pleasant part of the car shopping process. So buyers prefer to do it from the comfort of home.

That’s one conclusion from the first Cox Automotive Car Buyer Financing Journey Study. Cox Automotive, the parent company of Kelley Blue Book, has studied the car buyer journey for 12 years to understand what car shoppers go through and what matters to them. This year, researchers expanded the study to delve into the financing process.

Researchers surveyed more than 3,000 people who had financed the purchase or lease of a new or used car within the prior 12 months.

What They Learned:

  • Only 29% of buyers applied for financing online, though 96% said they were willing to.
  • Those who got their financing online were happier with their purchase experience and spent less time at the dealership.
  • Financing takes up about a third of the time car shoppers spend researching their purchase.
  • The average shopper spent 4 hours and 23 minutes researching, applying, and signing for financing.
  • Seventy percent of buyers considered at least two lenders, but buyers who completed more of their shopping process online were more likely to be loyal to a financial institution they’d already done business with.

Different Generations Have Different Needs

Millennials and members of Generation Z were more likely to apply for financing online than older buyers. But they were also more likely to prefer assistance — nearly half wanted someone to explain the steps of the financing process. Baby boomers were less likely to complete their financing online, but when they did, only 38% appreciated the assistance.

Results Match Other Studies, Good Negotiating Tactics

The results match an important finding from the most recent version of the wider Car Buyer Journey Study. Last year, buyers were happier the less time they spent in a dealership.

Securing financing online also streamlines the negotiating process once you get to the dealership. Dealers will often try to get you to use their financing arrangements. But agreeing gives them another tool to use against you in negotiations, as they can vary monthly payments and interest rates to convince you to pay more in the long run for your new car.

While there’s no harm in exploring whether the dealer can beat your outside financing offer, walking into the negotiation with your financing already secured always gives you more options to make a deal that works for you over the long term.