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2016 U.S. Consumer Financing Satisfaction Study: Performing Well on Basics of Financing Can Deliver Significant Satisfaction Lift

2016 U.S. Consumer Financing Satisfaction Study: Performing Well on Basics of Financing Can Deliver Significant Satisfaction Lift

By Joseph Dobrian, November 18, 2016

Retail light-vehicle sales in the United States are expected to reach 14.0 million units in 2016, a decrease of 1.5% from 2015. With that in mind, both vehicle dealers and lenders are focusing on building better long-term relationships with their customers, according to the J.D. Power 2016 U.S. Consumer Financing Satisfaction Study.SM

With competition for sales thus increasing, it becomes more important for dealers and lenders to help the customer get financing quickly and at the best rate, establish an automatic payment method with a lender, and provide other services to ease the borrowing process.

“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 J.D. 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.”

Keep “Musts” in Mind
The study cites five fundamental “musts” that a dealer or lender should keep in mind as means to improving customer satisfaction:
  • Understanding the Deal: In the Luxury brand segment, overall satisfaction is 49 points higher (on a 1,000-point scale) 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).
  • Reference Guide: A lender welcome package that answers basic loan servicing questions (such as how to make payments and how to sign up for automatic payments) can reduce the number of contacts the customer needs to make. Specifically, among Luxury brand 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 customers of Luxury brand vehicles and 61 points among customers of Mass Market brand vehicles. 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 brand 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 range 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.”

Ford Motor Company Sweeps Brand Rankings
Lincoln Automotive Financial Services has the highest overall satisfaction score among finance providers for Luxury brand vehicle customers, with a score of 879. BMW Financial Services (866) ranks second and Audi Financial Services (864) ranks third.

Ford Credit ranks highest among lenders that specialize in Mass Market vehicle brands, with a score of 856. Bank of America (854) ranks second and Kia Motors Finance (851) ranks third.

Consumer Tips
Based on the study, J.D. Power offers the following consumer tips:

  • Ask friends and family about their experiences with the lenders associated with the vehicles you’re considering: two equally good lenders might offer quite different financing plans.
  • Some vehicle brands, and some individual dealers, might offer especially attractive financing. Take advantage of special incentives and figure out which plans offer the best overall terms, not just the near-term benefits.
  • Ask a financial expert about the advantages and disadvantages of various car loans.

About the Study
The 2016 U.S. Consumer Financing Satisfaction Study measures overall customer satisfaction in four factors: billing and payment process; onboarding process; phone contact; and website. 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.

Additional Research:

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