The auto financing process certainly has evolved significantly for the days of paper faxes, but Equifax emphasized that pre-approvals and credit checks remain a critical component of the automotive shopping process.
Equifax unveiled additional analysis in its ongoing study of consumer credit and shopping trends with the goal of gaining a better understanding of how credit is used by a variety of consumers, as well as better understanding consumer buying power.
According to its latest findings, Equifax found prospective purchasers view credit checks and pre-approval processes differently depending on where they are in the buying process.
The findings reveal that 52 percent of prospective purchasers have undergone a credit check, while just 15 percent have the intention of getting pre-approval on their desired vehicle. Even more interesting, nearly a third (32 percent) said they do not plan to seek pre-approval during the shopping process.
Equifax maintains that clearly, dealers and auto finance companies can play a larger role in helping or encouraging more pre-approvals, which may create a less adversarial environment when it comes to negotiation as well as a more expedited shopping process.
Equifax added that another way to foster this environment is through encouraging more shoppers to create online profiles during the research phase of shopping.
“After reviewing these trends more closely, it is clear that there are additional ways dealers and financiers can help their clients move from prospective purchase to completed transaction,” said Rebecca Kritzman, senior director of automotive marketing at Equifax.
“Encouraging the creation of profiles that lead to more customized searches, securing more pre-approvals on credit and offering consultation on buying power can all lead to a higher transaction rate in a less adversarial manner, which can translate to longer satisfied customer relationships in the future.”
Consumers are constantly looking for value when shopping for a vehicle and creating an online profile through a dealer’s online portal helps.
According to the study, approximately 35 percent of consumers who did not create a profile ended up spending more than they expected on their vehicle, compared to 29 percent who said they spent less than what they expected.
Equifax explained online profiles and customized search processes can help consumers navigate to better options that suit their specific needs, helping to build trust with dealers.
Buying power consultation is a critical component in helping consumers complete the auto shopping process.
The study showed men (37 percent) and women (39 percent) who recently completed a purchase said they received consultation on their buying power either before or during the shopping process. This compares to just a quarter of prospective purchasers overall who said they received consultation.