How car finance preferences may be changing
35% of Australians report they will get their next car loan through a dealer.
Car dealer finance is an option for more Australians than ever before, according to the second annual global survey by analytic software firm FICO.
The survey reported that 35% of Australians plan to use a dealer to get their next car loan, up 14% from the previous year. The percentage of those planning to get a loan online was down 7%, with loans from banks or traditional lenders also down 6%.
While the findings look promising for dealer finance providers, the survey was conducted during the banking royal commission, and results are likely skewed as a result.
Paul Swyny, FICO Australia client partner, says the survey must be viewed in its proper context. "This trend looks like good news for dealerships and puts Australian consumers more in line with North America and parts of Europe where the preference for the dealer channel is strong," he said.
"However, the research, which was conducted partway through the Australian Banking Royal Commission may not be reflective of current sentiment. The banks were already taking a reputational hit in the media, but the commission was only critical of dealer lending later in the piece."
Flex commissions, where dealers offered higher rates than what they received from the lender, came under heavy criticism in the commission's findings, and this would not be reflected in the figures according to Swyny.
"This practice has since been banned, but thanks to this and other findings of the Hayne report, dealerships likely have some work to do to maintain the ground they'd gained since last year's automotive financing study," he said.
The survey also found Australians were reluctant to shop around when looking for a car loan, with 52% only considering one lender. Only 43% looked at two or more lenders.
Despite this, 67% agreed they felt in control of the car finance process, and 31% reported getting a great deal on their most recent car loan, and 59% getting a good deal.
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