Looking for an online auto loan? Good luck.
Auto shoppers can cruise around the Internet and find everything from car prices to specs to reliability studies with ease. It’s when they start looking for financing information that things get tricky.
Most large banks and half of the major auto manufacturers do not offer online loan applications on their Web sites. Nearly one-third of banks don’t even
mention auto loans on their Web sites, according to a survey by
BenchMark Consulting International.
If you’re wondering what’s going on here, so are a lot of experts.
“I think it’s crazy for any financial institution not to be moving aggressively into e-commerce,” says Paul A. Eisenstein, publisher of
TheCarConnection.com. “I don’t see the logic for not being out there. I don’t see the excuse other than corporate laziness.”
Information that’s hard to find
Even when there
is auto loan information on a bank’s Web site, it can be difficult to find. Joel Weeks, a research analyst at BenchMark, surfed the Web sites of 12 auto manufacturers and the 50 largest banks in February. He believes many Web surfers looking for auto loan information will click away empty-handed.
“I got lost on almost all the Web sites and I’m an experienced Web surfer,” Weeks says. “I don’t know if I’d use the word frustrating … For a typical Web surfer it would be very difficult to find what you’re looking for.”
Lots of folks might not get past the home page.
“If I just clicked on a Web page the word “auto loan” wouldn’t be there — unless I hunted for it,” Weeks says.
“It was fairly clear that some of the companies had thought through how to guide someone through a Web site better than others.”
He believes that one-third of the sites that he surveyed had made a real effort to be surfer-friendly. The rest had just thrown up information. That may be a somewhat harsh assessment but it’s hardly a unique one considering the hit-and-miss world of the Internet.
“I don’t think banks are doing better or worse than any other industry,” Weeks says.
Banks don’t mind
Keep in mind that most banks are pretty pleased with how the auto lending business works offline. Most auto loans are still done down at the dealership. Dealers fax loan applications to banks, finance companies or credit unions and then take a cut of the profits. Banks get the majority of this business.
“Banks would rather work with dealers that are selling cars,” says John McGann, senior vice president at Killen & Associates, a market research firm in Palo Alto, Calif. “It’s a pretty good arrangement.”
“A customer is not going to be able to go to the Bank One site and find an application,” says Colin Jones, senior vice president of e-commerce business development for Bank One. “It’s through CarsDirect.com and through the dealer that they come to us.”
He says Bank One chose to partner with CarsDirect.com because it was one of the first sites to have the purchase agreement and financing “all wrapped up in a bow.”
“That’s how the deals happen,” Jones says.
But it may not be the way folks
want them to happen.
“People would prefer to deal with a local bank. We have study after study that shows that,” says Art Spinella, vice president of CNW Marketing/Research in Bandon, Ore. “I’m not going to go to CarsDirect to get an auto loan. The first place I’m going to go is my local bank, whether it’s online or if I walk in the branch.”
Consumers want to use the Web
Many people, about 63 percent of those who use the Internet as a source for automotive information, would like to apply for an auto loan online, according to a CNW Marketing/Research study done in October 1999.
At this point, the pickings are pretty slim. About a dozen of the country’s largest banks offer online applications, as do several credit unions. Online auto financing is also available from startups such as
CarFinance.com by E-Loan.
Folks who simply want to compare financing rates for banks in their area should check out the Bankrate.com
Some experts believe that it won’t be long before consumer interest and demand push banks to roll out more interactive auto financing sites.
“The consumer is saying, in effect, if you offer it online that’s where I would prefer to do it,” Spinella says. “The reality is the customer is going to end up ruling this.”
Bank One’s Jones points out that high school and college students already spend more than one-third of their disposable incomes on the Web.
“That’s the next generation of first-time car buyers,” Jones says. “They’re not going to go back to the old model.”