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Shoppers Wary of Dealer Loans, But Sign Them Anyway
Wednesday, July 16, 2014 6:25 AM

Although most car buyers finance their vehicles through dealerships, the vast majority don't plan to do so while in the online-research phase of shopping. The main reason: They think a dealer won't give them a competitive interest rate.

In contrast to the scant 14 percent who said they planned to finance the vehicle they were shopping for through a dealership or manufacturer program, typically about 80 percent of vehicle financing is arranged through a dealership's F&I office, according to the National Automobile Dealers Association.

The survey, conducted Feb. 18-March 6, asked consumers whether they planned to finance the vehicle they were shopping for. Thirty-three percent said they wouldn't be financing the vehicle, and 30 percent said they didn't know yet whether they would.

Twenty-three percent said they planned to finance the car or truck through a credit union or bank. Only 14 percent said they planned to finance it through a dealership or an automaker program.

Those who planned to finance through a bank or credit union were asked: "Why not through a dealership?" The largest single group, 54 percent, cited "higher interest rates."

Thirty-one percent said they "don't trust the dealer will give me the best deal available based on my credit" score, while 18 percent said they "don't want to spend extra time at the dealer getting approved for financing." Eleven percent responded that they "don't trust the dealership with my financial info."

The survey covered shoppers looking at new, used and both new and used vehicles that were within two years of making a purchase.

The survey also implies that those online shoppers might be open to advertising about financing possibilities, the KBB researchers noted.

Only 9 percent of shoppers who were interested only in used cars said they planned to finance a vehicle through a dealership or manufacturer program. On the other hand, the portion-planning to finance it through a dealership or automaker program jumped to 18 percent among those looking at both new and used vehicles and to 22 percent among those looking only at new vehicles.

 

(Source: Automotive News)