Customer satisfaction with auto lenders is highest when the dealer is left out of the equation, according to J.D. Power. Direct financing, or loans arranged through banks or credit unions, remains one of the smallest slices of the auto financing market, but gets the highest satisfaction scores.
Car buyers who financed their vehicles indirectly -- through a dealership -- without shopping lending options ahead of time ranked their satisfaction with the process lower on average than car buyers who financed directly with a lender.
J.D. Power, in its 2018 U.S. Consumer Financing Satisfaction Study, measures satisfaction based on five areas: the billing and payment process, mobile app experience, onboarding process, origination process and website experience. Satisfaction is calculated on a 1,000-point scale.
Customers reported the highest level of satisfaction when they believe they have chosen the lender on their own, said Jim Houston, senior director of J.D. Power's automotive finance practice.
Typically, Houston said, an F&I manager shops the customer's credit application, finds the best deal and pairs the customer with that lender. Customers looking for more control and choice in their lender feel confined by the process, according to the study.
"If consumers get a better rate somewhere else, but dealers recommend not going to them, it's confusing," Houston told Automotive News. "The dealer puts them through the lender of choice for the dealer, not the consumer. That's where you're seeing the direct side of the market being a little more relevant."
The study, conducted in July and August, relied on data from 13,787 surveys of consumers who financed or leased new and used vehicles within the past four years. Cash buyers were not included in the results.
Satisfaction scores rise depending on how proactive the customer is in the process. Fifty-eight percent of customers did not shop for financing ahead of time. They gave the process a satisfaction score of 833 on average. Most of them were age 40 or older, and the majority chose a lender based on dealer influence.
Direct lending customers reported an average satisfaction score of 867, and most of them said they shopped online for financing. Twenty-one percent of customers under 40 used direct financing compared with 79 percent who used indirect. For those over 40, only 8 percent used direct financing sources.
Customers who shopped lenders ahead of time but financed through the dealership reported on average a score of 857, only 10 points below the direct score.
The majority of auto finance deals are still completed with the dealership. Nearly half of participating customers reported shopping online for vehicle financing before entering the dealership, J.D. Power found. But regardless of age, among customers who shopped lenders ahead of time, just less than half said they ultimately selected a provider based on what they were told in the dealership.
"It is still an indirect market. It is still driven by the F&I managers," Houston said.
But if the customer knows how to interact with lenders digitally based on what they're told in the F&I office, Houston said, they can help bridge the gap between online interactions with lenders and conversations with F&I managers at the dealership.
Said Houston: "You can augment the move to digital by having a more robust interaction in the F&I office."