Consumer Motivations: Auto Loan Aggregators
The most important motivations and considerations for consumers shopping for auto loans using an auto loan aggregator are convenience, comparison shopping, speed, and loan approval and interest rates.
- In 2019, 13% of US consumers acquired their most recent auto loan online, compared with only 5% of consumers in 2018, so loans through loan aggregators are on the rise. "Today’s digital-savvy consumers said they valued online financing for the following reasons: 1) convenience, 2) the ability to comparison shop across lenders, and 3) speed."
- Convenience: One major benefit of auto loan aggregators is that consumers can quickly and easily find multiple loan offers. A recent survey found that convenience is highly important to consumers, with 91% of those surveyed stating that they would "accept (or at least consider) an instant vehicle loan offer if it meant avoiding dealing with a bank or doing extra paperwork."
- Comparison Shopping: Another key motivator for consumers to use a loan aggregator is that they can easily shop around for different loan options without needing to visit a physical dealership, bank, or lending institution. Consumers can compare rates without even visiting multiple websites. According to the National Financial Capability Survey conducted by the FINRA Investor Education Fund, 50% of consumers comparison shop for an auto loan. A FICO survey found that 95% of consumers consider one to three lenders before choosing a loan, and 60% reported that being instantly able to compare multiple loan offers was important to them when shopping for auto financing.
- Speed: For many consumers, speed is a key factor when shopping for an auto loan. Many car shoppers need a vehicle urgently due to an accident, breakdown, or other factors. As a result, the ability to find, apply for, and be approved for an auto loan all through one aggregator is highly appealing. According to the Consumer Financial Protection Bureau, some car consumers have only one or two days to purchase a car, so speed is key.
- Loan Approval and Interest Rates: A major consideration for borrowers is getting approved for a loan with an acceptable interest rate, particularly for borrowers with poor or fair credit. Nearly every source we encountered advises these borrowers to use loan aggregators to compare offers. In addition, loan aggregators create a path to borrowing for borrowers who won't get approved by traditional lenders such as dealerships or banks. This process is highly important for consumers, as a report from JD Power found that auto loan borrowers with fair credit will end up paying four times as much as borrowers with excellent credit.