Table of Contents
Executive Summary
-
- Top takeaways
- Market overview
- Impact of COVID-19 on vehicle financing
-
- Figure 1: Short-, medium- and long-term impact of COVID-19 on vehicle financing, February 2021
- Opportunities and challenges
- Digital loan advisors can reduce consumer pain points
- Low interest rates on EVs can provide a much needed boost to the segment
- COVID-19 financial assistance programs are still in high demand
- Auto loans offer financial flexibility and alternative spending
The Market – Key Takeaways
-
- Vehicle financing during the 2008 Great Recession and COVID-19 recession parallel each other
- Low financing rates could give a jolt to the EV market
- Interest rates expected to drop further in 2021
Impact of COVID-19 on Vehicle Financing
-
- The state of vehicle financing during COVID-19 parallels the Great Recession
-
- Figure 2: Short-, medium- and long-term impact of COVID-19 on vehicle financing, February 2021
- Lockdown
- Re-emergence
- Recovery
- COVID-19: US context
- Learnings from the last recession
Market Factors
-
- Auto loan interest rates expected to drop throughout 2021
- Vehicle financing can alleviate stress caused by economic downturn
-
- Figure 3: Consumer confidence and unemployment, 2000-December 2020
- Potential COVID-19 stimulus checks could be a boon to cash down payments
- Evolution of tech
Market Opportunities
-
- Educate consumers on co-branded card benefits to increase adoption
-
- Figure 4: Consumer attitudes toward credit cards, December 2020
- COVID-19 incentives generate interest in OEM auto loans
-
- Figure 5: Consumer attitudes toward COVID-19 vehicle financing incentives, December 2020
- Low financing rates on EVs can assist the growing segment
Companies and Brands – Key Takeaways
-
- GM offers 0% financing to push new and used EV inventory
- Rivian and Chase soon to offer a fully digital vehicle financing experience
- Ally Financial revamps automated decision progress
- AutoFi lending-as-a-service to be a boon to online used car dealerships
Competitive Strategies
-
- GM to offer 0% financing on used EVs
- Rivian and Chase partner to create all-digital financing experience
- Ally revitalizes and ramps up auto loan automation process
- AutoFi offers “lending-as-a-service” to automakers, lenders and dealers
-
- Figure 6: AutoFi lending-as-a-service campaign, December 2020
Consumer Trend Drivers Impacting the Role of Transportation
-
- Technology
- Value
- Wellbeing
The Consumer – Key Takeaways
-
- Financing is the most popular way to pay for a vehicle
- Establishing a relationship can lead to future business
- Consumers gloss over most auto loan lender benefits
- COVID-19 relief programs are a must for struggling consumers
Consumer Car Buying Behaviors
-
- Longer-term purchasing plans opens door for early communication
-
- Figure 7: Vehicle purchase timeline, December 2020
- Price tag of new vehicles opens door for financing offers on used options
-
- Figure 8: Vehicle type consideration, December 2020
-
- Figure 9: AAA Northeast, Vehicle Lending, February 2021
Vehicle Financing Behaviors
-
- Financing is the most popular way to pay for a car
-
- Figure 10: Vehicle payment options, December 2020
- A small portion of car buyers are unsure how to pay for their next vehicle
-
- Figure 11: Vehicle payment options, December 2020
- The oldest and youngest car buyers are paying full in cash
-
- Figure 12: Vehicle payment options, by age, December 2020
-
- Figure 13: Credit Sesame email campaign, October 2020
Auto Loan Lenders
-
- A prior financial relationship leads to future auto loans
-
- Figure 14: Auto loan lenders, December 2020
-
- Figure 15: Auto loan lenders, by age, December 2020
- OEM loans are popular among older consumers
-
- Figure 16: Auto loan lenders, by age, December 2020
Auto Loan Benefits
-
- Consumers overwhelmingly focus on low- or no-interest; overlook other benefits
-
- Figure 17: Auto loan benefits, December 2020
- Early-career consumers seek COVID assistance as a lender benefit
-
- Figure 18: Auto loan benefits, by age, December 2020
- Source: Lightspeed/Mintel
- Offering no money down attracts consumers to OEM auto loans
-
- Figure 19: Auto loan benefits, by lender, December 2020
Attitudes toward Vehicle Loans
-
- Pre-purchase financing education is needed to help car buyers avoid surprises
-
- Figure 20: Consumer attitudes toward auto loans, December 2020
- Consumers feel confused, overwhelmed by vehicle financing
-
- Figure 21: Perceptions of vehicle financing, December 2020
- COVID-19 loan qualification relief programs can aid concerned consumers
-
- Figure 22: Perceptions of vehicle financing, by household income, December 2020
- Securing the best auto loan is the most important part of car buying
-
- Figure 23: Perceptions of vehicle financing, December 2020
Appendix – Data Sources and Abbreviations
-
- Forecast
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
Back to top