Category: Consumer LendingUnited States

Dealership-Based Auto Finance Faces Permanent Challenge as Digital and Direct Financing Options Increase during Pandemic, JD Power Finds

2020-11-09

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That meeting with the auto dealership’s finance department—the one in which vehicle buyers are presented with the dealer’s recommended financing options and offered add-ons—is evolving to more of a digital experience and is being dictated by consumer demand. According to the JD Power 2020 U.S. Consumer Financing Satisfaction Study,^SM released today, more vehicle buyers than ever have turned to digital channels when it comes to pre-transaction research and lining up financing options for a new vehicle. A growing percentage are securing direct financing prior to their purchase. While some of this behavior has been driven by the COVID-19 pandemic, an increasing number of buyers say they prefer a digital loan origination process for their next vehicle purchase.

“The pandemic accelerated a trend toward digital auto loan origination that has been developing for some time,” said Patrick Roosenberg, director of automotive finance intelligence at JD Power. “Many buyers who have secured financing digitally had a great experience and won’t go back to the old way of doing things—even when COVID-19 is no longer a factor. To improve satisfaction and lower the cost to serve during these changing times and beyond, providers need to build a robust digital platform that addresses borrower needs, from research and origination through account management and billing.”

Following are key findings of the 2020 study:

• More consumers complete digital credit applications, and like it: Nearly one-third (32%) of auto loan borrowers completed a digital credit application, with 22% using the lender’s website and 10% using a mobile app. The frequency of digital loan applications has increased eight percentage points from last year. The average customer satisfaction score for those applying for an auto loan digitally is 887 (on a 1,000-point scale), while the average customer satisfaction score for those applying at a dealership is 842.
• A trend that signals staying power beyond the pandemic: A total of 40% of borrowers say they prefer at least part of the loan origination process to be digital when they purchase their next vehicle. The number of borrowers who say they will apply for financing digitally (via website or mobile app) in the future is up three percentage points from 2019, while the number of borrowers who say they will secure financing through the dealership is down four percentage points year over year.
• Direct financing gains traction, led by luxury segment: While 85% of auto loan customers still secure their financing through the dealership, more borrowers than ever are pursuing direct financing. A total of 15% of borrowers in this year’s study secured direct financing, up three percentage points from a year ago. In the luxury segment, that number is up six percentage points to 26% of all borrowers.
• Digital account management and bill pay improves customer satisfaction: A growing number of borrowers also are turning to digital channels for loan account management and bill pay. During the past two years, use of lender mobile apps for account management has increased eight percentage points and use of the website has increased two percentage points, while offline account management has declined three percentage points. Customers have the highest levels of overall satisfaction (884) when using lender’s mobile app.

Study Rankings

Lincoln Automotive Financial Services ranks highest in customer satisfaction among luxury brands, with a score of 899. Capital One Auto Finance (885) ranks second and BMW Financial Services (881) ranks third.

BB&T now Truist ranks highest among mass market brands, with a score of 879. Capital One Auto Finance (870) and Ford Credit (870) rank second in a tie.

The JD Power U.S. Consumer Financing Satisfaction Study measures overall customer satisfaction in five factors (listed alphabetically): billing and payment process; mobile app experience; onboarding process; origination process; and website experience. The study was fielded in July-August 2020 and is based on responses from 10,103 customers who financed a new or used vehicle through a loan or lease within the past three years.

For more information about the JD Power U.S. Consumer Financing Satisfaction Study, visit https://www.jdpower.com/business/resource/us-consumer-financing-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
John Roderick; East Coast; 631-584-2200; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

 

Pandemic Wreaks Havoc on Dealer-Lender Communications and Satisfaction as Industry Goes Remote, JD Power Finds

2020-12-17

jillian.breska

Disruption has been the name of the game in the automotive finance industry as the COVID-19 pandemic has simultaneously strained day-to-day operations and pushed more transactions than ever to digital. According to the JD Power 2020 U.S. Dealer Financing Satisfaction Study,^SM released today, these changes—many of which dealers expect to be long-term—are forcing lenders to evolve quickly in an increasingly digital environment.

“The pandemic has severely disrupted dealer-lender communication, with many dealers reporting that lenders were delayed or not available when they needed them, or not able to assist in a timely manner,” said Patrick Roosenberg, director of automotive finance intelligence at JD Power. “While the effect of the pandemic has pushed more sales to digital channels, 55% of dealers are saying they expect at least one in five of their sales to be digital in the next year. With lenders’ sales reps forgoing on-site dealer visits and the credit staff and funders working remotely, the need for consistent and reliable communication is paramount to dealer satisfaction. Lenders will need to step up their efforts to deliver high levels of service to help facilitate sales, whether those transactions are happening virtually or in the dealership. Knowledgeable, helpful and available sales reps, credit analysts and funders can help drive incremental business.”

Study Rankings

Captive—Mass Market Segment

Volkswagen Credit ranks highest in overall dealer satisfaction with a score of 939 (on a 1,000-point scale), followed by Subaru Motors Finance (934) and Honda Financial Services (902).

National Banking

TD Auto Finance ranks highest in overall dealer satisfaction with a score of 931, followed by Ally Financial (922) and Chase Automotive Finance (872).

Regional Banking

Citizens One Auto Finance ranks highest in overall dealer satisfaction with a score of 954, followed by Huntington National Bank (910) and Fifth Third Bank (879).

Sub-Prime

Ally Financial ranks highest in overall dealer satisfaction with a score of 913, followed by Chase Automotive Finance (878) and Capital One Auto Finance (820).

Lease

Audi Financial Services ranks highest in overall dealer satisfaction with a score of 970, followed by Subaru Motors Finance (946) and Volkswagen Credit (941).

The 2020 U.S. Dealer Financing Satisfaction Study is based on responses from 3,960 auto dealer financial professionals. The study, which was fielded in August-September 2020, measures auto dealer satisfaction in six segments of lenders: captive luxury–prime;¹ captive mass market–prime; lease; non-captive national–prime; non-captive regional–prime; and non-captive sub-prime.

For more information about the JD Power U.S. Dealer Financing Satisfaction Study, visit https://www.jdpower.com/business/resource/us-dealer-financing-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
John Roderick; East Coast; 631-584-2200; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info.

¹The captive luxury segment did not meet requirements to be award eligible.

 

Consumer Lending Satisfaction Hinges on Trust, Ease of Access Now More Than Ever Before, JD Power Finds

2020-05-27

jillian.breska

TROY, Mich.: 28 May 2020 — A perfect storm of record-high levels of unemployment, record low interest rates and increased reliance on digital interactions is putting consumer lenders to the test like never before. According to the JD Power 2020 U.S. Consumer Lending Satisfaction Study,^SM released today, lenders’ ability to build trust and provide seamless, easy-to-use online tools during this heightened period of consumer anxiety will define their brands for many years to come.

“Brand image is very important to consumers, and they’re making it clear that lenders need to foster trust in the brand and the lending experience,” said Jim Houston, managing director of consumer lending and automotive finance intelligence at JD Power. “To accomplish that, lenders need to provide secure, easy-to-use web-based tools and focus on aligning product offerings and terms to the specific needs of their customers during this challenging period.”

Following are key findings of the 2020 study:

• Repayment terms and reputation are key drivers in lender selection: The two most important variables driving the selection of a consumer lender are repayment terms and reputation of the lender. Additional factors weighing heavily on the decision process are quick application and approval processes; the ability to speak with a live person via phone; and quality of mobile and digital capabilities.
• Most customers plan to keep making payments on personal loans and HELOCs: Based on additional JD Power research conducted May 8-10 of this year, fewer than 15% of personal loan and HELOC (home equity line of credit) customers feel they will be unable to make their minimum monthly payments as a result of the COVID-19 pandemic. However, 42% say they feel the worst is yet to come in terms of the effect of the pandemic on their personal finances.
• Documents are the enemy of customer satisfaction: The ideal number of documents required to apply for and receive approval for a consumer loan is zero. Overall satisfaction with lenders is 893 (on a 1,000-point scale) when no documents are required. That score falls to 865 when one or two documents are required.
• Customers will consider alternative products: As the market for personal loans continues to gain new entrants from traditional retail, e-commerce and technology sectors, 58% of consumers say they did consider using alternative products for lending.

Study Rankings

U.S. Bank ranks highest among HELOC lenders in overall customer satisfaction with a score of 875. Chase (870) and PNC (870) rank second in a tie.

Lightstream ranks highest among personal loan lenders in overall customer satisfaction with a score of 891, followed by Marcus by Goldman Sachs (884) and Discover (877).

The JD Power U.S. Consumer Lending Satisfaction Study measures overall customer satisfaction based on performance in four factors: application and approval process; loan management; offering and terms; and closing (HELOC only). The study is based on responses from 4,370 personal loan and HELOC customers and was fielded in January-February 2020.

For more information about the JD Power U.S. Consumer Lending Satisfaction Study, visit https://www.jdpower.com/business/financial-services/us-consumer-lending-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable JD Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, JD Power has offices serving North America, Asia Pacific and Europe.

Media Relations Contacts
Geno Effler, JD Power; Costa Mesa, Calif.; 714-621-6224; [email protected]
John Roderick; Huntington, NY.; 631-584-2200; [email protected]

About JD Power and Advertising/Promotional Rules www.jdpower.com/business/about-us/press-release-inf

 

As Business Environment Gets More Challenging for Dealers and Lenders, Performing Well on Basics of Financing Can Deliver Significant Satisfaction Lift, JD Power Finds

 

2016-11-16

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COSTA MESA, Calif.: 17 Nov. 2016 — With the pace of new-vehicle retail sales slowing, dealers and lenders are focusing on building a relationship with their customers to increase satisfaction and business retention, according to the JD Power 2016 U.S. Consumer Financing Satisfaction Study,^SM released today.

Retail light-vehicle sales in the United States are expected to reach 14.0 million units in 2016, down 1.5% from 2015.¹  With increased competition for sales, dealers and lenders that perform well in the basics of financing—including helping the customer get financing quickly and at the best rate—can boost customer satisfaction and generate repeat business for both the dealer and the lender. As an example, the simple task of establishing an automatic payment method with a lender can lead to increased customer satisfaction and business retention.

“The small drop in sales is making for a very competitive auto lending market, which means dealers and lenders in many ways need to get back to the basics to satisfy customers,” said Jim Houston, senior director of auto finance at JD Power. “Lenders need to move beyond a transactional relationship and create a customer-centric culture that helps them build a relationship with their customers. The lenders—and dealers—that are able to do that are the ones most likely to excel.”

Five Fundamentals to Improving Satisfaction

The study identifies five aspects that can lead to an improved overall customer financing experience:

• Understanding the Deal: In the luxury brand segment, overall satisfaction is 49 points higher among customers whose dealer or finance manager explained account features, services, or benefits of their financing  than among those whose dealer or finance manager did not (880 vs. 831, respectively, on a 1,000-point scale).
• Reference Guide: A lender welcome package that answers basic loan servicing questions (e.g., how to make payments and how to sign up for auto-pay) can reduce the number of inbound contacts. Specifically, among luxury customers who say they “completely” understand all of the servicing information, problem incidence drops to 8%, compared with the overall luxury problem incidence of 10%.
• Accessible Self-Help Tools: When email customer service is available, satisfaction improves by 42 points among luxury brand customers and 61 points among mass market brand customers. When online bill pay is available, satisfaction improves by 53 points in the luxury segment and by 86 points in the mass market segment.
• “One and Done”: Satisfaction declines significantly when a customer has to contact their lender more than once to resolve a problem. Overall satisfaction among luxury brand customers resolving a problem with one call is 875 points but declines to 821 among those whose resolution requires two calls. 
• Satisfaction Equals Loyalty: Highly satisfied luxury and mass market customers (overall satisfaction scores above 900) can have a significant effect on dealers and lenders, as they are nearly twice as likely to return to a particular dealership and are more than twice as likely to lease or purchase the same brand again as those who are less satisfied (scores between 801 and 900).

“In the seemingly complicated environment of vehicle financing, it’s the sometimes-overlooked customer handling steps that can bring clarity to the customer and give dealers and lenders a unique competitive advantage,” Houston said. “Working together on the steps that clearly affect satisfaction levels can enable dealers and lenders to turn first-time customers into repeat customers.”

Study Rankings

Lincoln Automotive Financial Services ranks highest among luxury brands, with a score of 879. BMW Financial Services (866) ranks second and Audi Financial Services (864) ranks third.

Ford Credit ranks highest among mass market brands, with a score of 856. Bank of America (854) ranks second and Kia Motors Finance (851) ranks third.

About the Study

The 2016 U.S. Consumer Financing Satisfaction Study measures overall customer satisfaction in four factors (listed alphabetically): billing and payment process; onboarding process; phone contact; and website. Satisfaction is calculated on a 1,000-point scale. The study is based on responses from more than 19,000 customers who financed a new- or used-car purchase or lease within the past four years and was fielded in July-August 2016.

For more information about the 2016 U.S. Consumer Financing Satisfaction Study, visit http://www.jdpower.com/resource/us-consumer-financing-satisfaction-study.

See the online press release at http://www.jdpower.com/pr-id/2016230.

Media Relations Contacts

John Tews; Troy, Mich.; 248-868-0621; [email protected]

Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]

About JD Power and Advertising/Promotional Rules www.jdpower.com/about-us/press-release-info

1. Source: Sales forecast developed jointly by JD Power and LMC Automotive