Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Vehicle Financing - US - December 2010

This report explores the vehicle financing market in the U.S. It provides insight into the external and internal factors affecting vehicle sales, financing options and trends and what they mean for future sales, promotional campaigns and industry innovations. Specific questions that are answered in this report include, but are not limited to, the following:

  • What will most impact the future growth of the vehicle financing sector and the larger automotive industry in light of the recent successes of both Ford and GM when consumers are still struggling in the New Normal economy?
  • To what extent will the prospective vehicle buyer begin to seriously do business with credit unions and new forms of financing, such as peer-to-peer financing now being sold via the internet? If these sectors become more prominent in the business, what will that signal to the larger banking and financing arms of the automotive companies?
  • How is the industry preparing for a consumer economy where credit scores are dropping, making fewer eligible for the good deals and low interest rates currently being advertised by the automakers?
  • Will the landscape become even more competitive in the months and years ahead among vehicle financing operations or divisions, and will more industries find it advantageous to develop innovative products for the hopefully recovering, but recession-wary American buyer?
  • How are prospective buyers learning from the internet about financing options? To what extent are the dealer and lending sites responsive to the needs of consumers when bringing the internet into their purchasing decisions?

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Scope and Themes

    • What you need to know
      • Data Sources
        • Consumer survey data
          • Advertising creative
            • Abbreviations and terms
              • Abbreviations
              • Executive Summary

                • Consumers choosing financing or paying fully in cash
                  • Consumers want low interest rates, convenience in their choice
                    • Consumers paying fully in cash mainly to avoid interest rates
                      • A quarter of financers put down 0% cash for their vehicle
                        • 5.56% average finance rate secured
                          • Consumers choosing long loan terms to finance vehicles
                            • Online plays leading role for researching auto financing
                              • The U.S. automotive industry has been on a wild ride
                                • GMAC (now Ally) posts profitability
                                  • Ford ‘most popular’ automaker
                                    • But consumer debt is staggering
                                      • Unemployment still high, new auto/light truck sales down from peak
                                        • Consumer credit scores are dropping
                                          • Default risk on subprime borrowing rises 406%
                                            • But how will industry react?
                                              • Credit unions gaining traction
                                              • Insights and Opportunities

                                                • Industry websites important to buyers
                                                  • Credit unions need better advertising creative
                                                    • Consequences of the “New Normal”
                                                    • Inspire Insights

                                                        • Trend—Solid as a Rock
                                                        • Market Drivers

                                                          • Key points
                                                            • Cut-rate financing, shorter loan terms trending to help drive up sales
                                                              • Persistent unemployment drives consumers to consider low financing
                                                                  • Figure 1: U.S. unemployment rate, by month, July 2008-October 2010
                                                                • Disposable income remains limited in many households
                                                                  • Figure 2: Real disposable personal income, January 2007-January 2010
                                                                • Consumer confidence remains at historically low level
                                                                  • Figure 3: Consumer Sentiment Index, 2007-09
                                                                • New auto/light truck sales in decline from peak
                                                                  • Figure 4: New car and light truck sales, 2000-10
                                                                • Recalls by top automotive manufacturers hurt public confidence
                                                                  • Increase in consumer debt forcing consumers to slow spending
                                                                      • Figure 5: Consumer debt, Q1 1999-Q1 2010
                                                                  • Segment Performance

                                                                    • Key points
                                                                      • Dealership finance and paying fully in cash top ways to finance
                                                                        • Figure 6: Financing chosen for the last new, used or leased vehicle, by gender, September 2010
                                                                      • Those aged 18-24 and 65+ most likely to pay in cash for vehicle
                                                                        • Figure 7: Financing chosen for the last new, used or leased vehicle, by age, September 2010
                                                                      • Dealership financing and cash main ways to finance
                                                                        • Figure 8: Financing chosen for the last new, used or leased vehicle, by household income, September 2010
                                                                      • Trends show slightly more financing through credit unions
                                                                        • Figure 9: Type of financing obtained for new/used vehicles, 2004-10
                                                                    • Dealership Financing—Domestics

                                                                      • Key points
                                                                        • Ford Credit
                                                                          • Ally (General Motors and Chrysler)
                                                                            • General Motors Financial Company
                                                                              • GM offers cashback or low interest rates
                                                                                • Chrysler Financial
                                                                                • Dealership Financing—Imports

                                                                                  • Key points
                                                                                    • BMW Financial Services
                                                                                      • Toyota Financial Services
                                                                                        • Hyundai Motor Finance
                                                                                          • American Honda Finance Corporation
                                                                                            • Other Imports
                                                                                            • Commercial Bank Auto Loans

                                                                                              • Key points
                                                                                                • Capital One Pre-Approvals
                                                                                                  • Wells Fargo Refinancing
                                                                                                    • Chase $100 cashback
                                                                                                      • SunTrust Bank
                                                                                                        • PNC Bank
                                                                                                          • Bank of America
                                                                                                          • Credit Unions

                                                                                                            • Key point
                                                                                                              • Credit union APRs among the lowest
                                                                                                                • Figure 10: Select credit union auto finance offerings, October 2010
                                                                                                            • Brand Qualities

                                                                                                              • Key points
                                                                                                                • Credit unions, small banks have highest satisfaction rates
                                                                                                                    • Figure 11: Customer satisfaction with financial products companies, among current and former customers, December 2009
                                                                                                                  • BMW, Ford Credit rate high for financial services
                                                                                                                    • Figure 12: New vehicle consumer financing ratings*, 2008
                                                                                                                • Innovations and Innovators

                                                                                                                  • Power flat financing less risk to dealers, more incentive to sell aftermarket
                                                                                                                    • BMW Financial reaches out to owners to get them better rates
                                                                                                                      • BMW incorporating iPad, faster software to speed transactions
                                                                                                                        • Automakers tailor incentives to reflect recession theme
                                                                                                                        • Marketing Strategies

                                                                                                                          • Overview
                                                                                                                            • Online Advertising
                                                                                                                              • U.S. Bank
                                                                                                                                • Figure 13: U.S. Bank Auto Loan online advertisement, 2010
                                                                                                                              • USAA Auto Circle
                                                                                                                                • Figure 14: USAA Auto Circle online advertisement, 2010
                                                                                                                              • Chevrolet
                                                                                                                                • Figure 15: Chevrolet 2011 Silverado online advertisement, 2010
                                                                                                                              • Honda
                                                                                                                                • Figure 16: Honda CBR600RR Wanna Ride? online advertisement, 2010
                                                                                                                              • Summit Federal Credit Union
                                                                                                                                • Figure 17: Summit Federal Credit Union online advertisement, 2010
                                                                                                                              • Volkswagen Jetta
                                                                                                                                • Figure 18: Volkswagen Sign Then Drive online advertisement, 2010
                                                                                                                              • Direct Mail
                                                                                                                                • San Diego County Credit Union
                                                                                                                                  • Figure 19: San Diego County Credit Union Auto Loans direct mail ad, 2010
                                                                                                                                • Wells Fargo
                                                                                                                                  • Figure 20: Wells Fargo Auto Refinance direct mail ad, 2010
                                                                                                                                • State Farm Bank Auto Loans
                                                                                                                                  • Figure 21: State Farm Bank Auto Loans direct mail ad, 2010
                                                                                                                                • Toyota
                                                                                                                                  • Figure 22: Toyota 100% of MSRP financing direct mail ad, 2010
                                                                                                                                • Print Advertising
                                                                                                                                  • PNC Bank
                                                                                                                                    • Figure 23: PNC Bank Auto Loan print ad, 2010
                                                                                                                                  • First Community Credit Union
                                                                                                                                    • Figure 24: First Community Credit Union Auto Loan print ad, 2010
                                                                                                                                  • Keesler Federal Credit Union
                                                                                                                                    • Figure 25: Keesler Federal Credit Union Auto Loan print ad, 2010
                                                                                                                                  • Financial Resources Credit Union
                                                                                                                                    • Figure 26: Financial Resources Credit Union Auto Loan print ad, 2010
                                                                                                                                  • Email
                                                                                                                                    • Capital One Auto Loan
                                                                                                                                      • Figure 27: Capital One Auto Loans email ad, 2010
                                                                                                                                    • Lending Tree
                                                                                                                                      • Figure 28: Lending Tree Auto Loan Refinancing email ad, 2010
                                                                                                                                    • Chase Auto Loans
                                                                                                                                      • Figure 29: Chase Auto Loans email ad, 2010
                                                                                                                                    • Broadcast advertising
                                                                                                                                      • Honda
                                                                                                                                        • Figure 30: Mr. Opportunity Night on the Town Honda Clearance TV ad, 2010
                                                                                                                                      • Toyota
                                                                                                                                        • Figure 31: Toyota Sienna TV ad, 2010
                                                                                                                                      • BMW
                                                                                                                                        • Figure 32: BMW Ultimate Driving Machine TV ad, 2010
                                                                                                                                    • Vehicle Purchasing

                                                                                                                                      • Key point
                                                                                                                                        • Four in 10 have purchased a vehicle in past three years
                                                                                                                                          • Figure 33: Vehicle purchasing, by gender, age and household income, September 2010
                                                                                                                                      • Vehicle Purchasing—New Versus Used

                                                                                                                                        • Key points
                                                                                                                                          • Buy new still most prevalent
                                                                                                                                            • Figure 34: Whether last vehicle bought was new, used or leased, by gender, September 2010
                                                                                                                                          • Buying a new vehicle skews to older segments
                                                                                                                                            • Figure 35: Whether last vehicle bought was new, used or leased, by age, September 2010
                                                                                                                                          • Buying new skews to higher incomes
                                                                                                                                            • Figure 36: Whether last vehicle bought was new, used or leased, by household income, September 2010
                                                                                                                                        • Reasons for Choosing Vehicle Financing

                                                                                                                                          • Key points
                                                                                                                                            • Interest charges top reason to pay cash
                                                                                                                                              • Figure 37: Reasons why paid 100% cash for the vehicle, September 2010
                                                                                                                                            • For those who financed, low interest rate key
                                                                                                                                              • Figure 38: Reasons for using this type of financing to pay for auto loan, by source of financing, September 2010
                                                                                                                                            • Low interest rates, convenience top reasons why financing is chosen
                                                                                                                                              • Figure 39: Reasons for using this source of financing to pay for auto loan, by gender, September 2010
                                                                                                                                            • Low interest rates especially important to those aged 25-34
                                                                                                                                              • Figure 40: Reasons for using this source of financing to pay for auto loan, by age, September 2010
                                                                                                                                            • Low interest rates more valued as household income increases
                                                                                                                                              • Figure 41: Reasons for using this source of financing to pay for auto loan, by household income, September 2010
                                                                                                                                          • How Much is Put Down to Finance Vehicle

                                                                                                                                            • Key points
                                                                                                                                              • A quarter of financers put down 0%
                                                                                                                                                • Figure 42: Percentage of cash put down when financing vehicle in last three years, by gender, September 2010
                                                                                                                                              • Zero cash down highest among the over-45s
                                                                                                                                                • Figure 43: Percentage of cash put down when financing vehicle in last three years, by age, September 2010
                                                                                                                                              • Middle-income households most likely to put 5-19% of cash down
                                                                                                                                                • Figure 44: Percentage of cash put down when financing vehicle in last three years, by household income, September 2010
                                                                                                                                            • Finance Rate Locked in For Vehicle Purchase

                                                                                                                                              • Key points
                                                                                                                                                • Average finance rate secured is 5.56%
                                                                                                                                                  • Figure 45: Finance rate among those who secured auto financing, by gender, September 2010
                                                                                                                                              • Length of Loan For New Car Purchase

                                                                                                                                                • Key points
                                                                                                                                                  • Most choosing second-longest loan term
                                                                                                                                                    • Figure 46: Length of loan for vehicle, by gender, September 2010
                                                                                                                                                  • 25-34 year olds most likely financing the longest
                                                                                                                                                    • Figure 47: Length of loan for vehicle, by age, September 2010
                                                                                                                                                  • High-income households invested in long loan terms
                                                                                                                                                    • Figure 48: Length of loan for vehicle, by household income, September 2010
                                                                                                                                                • Ways to Prepare for Auto Financing

                                                                                                                                                  • Key points
                                                                                                                                                    • Majority of financers creating budget to determine rates
                                                                                                                                                        • Figure 49: Steps taken before entering the vehicle financing process, by gender, September 2010
                                                                                                                                                      • 25-44-year-olds most involved in preparations
                                                                                                                                                        • Figure 50: Steps taken before entering the vehicle financing process, by age, September 2010
                                                                                                                                                      • Respondents from households earning $75K-99.9K research online
                                                                                                                                                        • Figure 51: Steps taken before entering the vehicle financing process, by household income, September 2010
                                                                                                                                                    • Ways to Research Auto Financing

                                                                                                                                                      • Key points
                                                                                                                                                        • Online plays leading role for researching auto financing
                                                                                                                                                          • Figure 52: How buyers researched the vehicle financing process, by gender, September 2010
                                                                                                                                                        • Online research rated highest among those aged 25-44
                                                                                                                                                          • Figure 53: How buyers researched the vehicle financing process, by age, September 2010
                                                                                                                                                        • Online research lowest among households earning the least
                                                                                                                                                          • Figure 54: How buyers researched the vehicle financing process, by household income, September 2010
                                                                                                                                                      • Impact of Race and Hispanic Origin

                                                                                                                                                        • Key points
                                                                                                                                                          • Hispanics most active in purchasing new
                                                                                                                                                            • Figure 55: Whether vehicle bought was new, used or leased, by race and Hispanic origin, September 2010
                                                                                                                                                          • Hispanics least likely to pay fully in cash
                                                                                                                                                            • Figure 56: Financing chosen for the last new, used or leased vehicle, by race and Hispanic origin, September 2010
                                                                                                                                                          • Hispanics show greater value for ease of negotiation
                                                                                                                                                            • Figure 57: Reasons for using this type of financing to pay for auto loan, by race and Hispanic origin, September 2010
                                                                                                                                                          • Hispanics putting down greater amount of cash
                                                                                                                                                            • Figure 58: Percentage of cash put down when financing vehicle in last three years—whites vs. Hispanics, September 2010
                                                                                                                                                          • Blacks paying higher interest rates
                                                                                                                                                            • Figure 59: Finance rate among those who secured financing, by race and Hispanic origin, September 2010
                                                                                                                                                          • Hispanics most likely to develop budget
                                                                                                                                                            • Figure 60: Steps taken before entering the vehicle financing process, by race and Hispanic origin, September 2010
                                                                                                                                                          • Hispanics most active in online research
                                                                                                                                                            • Figure 61: How buyers researched the vehicle financing process, by race and Hispanic origin, September 2010
                                                                                                                                                        • Attitudes and Opinions about Personal Finance

                                                                                                                                                          • Key points
                                                                                                                                                            • Consumers very conservative about money
                                                                                                                                                              • Figure 62: Attitudes and opinions about personal finance, by gender, April 2009-June 2010
                                                                                                                                                            • Confidence with money grows with age
                                                                                                                                                              • Figure 63: Attitudes and opinions about personal finance, by age, April 2009-June 2010
                                                                                                                                                          • Cluster Analysis

                                                                                                                                                              • Shoppers
                                                                                                                                                                • Demographics
                                                                                                                                                                  • Characteristics
                                                                                                                                                                    • Opportunity
                                                                                                                                                                      • Pokers
                                                                                                                                                                        • Demographics
                                                                                                                                                                          • Characteristics
                                                                                                                                                                            • Opportunity
                                                                                                                                                                              • Divers
                                                                                                                                                                                • Demographics
                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                      • Cluster characteristics
                                                                                                                                                                                        • Figure 64: Vehicle financing clusters, September 2010
                                                                                                                                                                                        • Figure 65: Financing chosen for the last new, used or leased vehicle, by vehicle financing clusters, September 2010
                                                                                                                                                                                        • Figure 66: Reasons why buyers used this type of financing to pay for auto loan, by vehicle financing clusters, September 2010
                                                                                                                                                                                        • Figure 67: Steps taken before entering the vehicle financing process, by vehicle financing clusters, September 2010
                                                                                                                                                                                        • Figure 68: How buyers researched the vehicle financing process, by vehicle financing clusters, September 2010
                                                                                                                                                                                      • Cluster demographics
                                                                                                                                                                                        • Figure 69: Vehicle financing clusters, by gender, September 2010
                                                                                                                                                                                        • Figure 70: Vehicle financing clusters, by age, September 2010
                                                                                                                                                                                        • Figure 71: Vehicle financing clusters by household income, September 2010
                                                                                                                                                                                        • Figure 72: Vehicle financing clusters, by race, September 2010
                                                                                                                                                                                        • Figure 73: Vehicle financing clusters, by Hispanic origin, September 2010
                                                                                                                                                                                      • Cluster methodology
                                                                                                                                                                                      • Appendix—Simmons Mosaic Analysis

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • Mosaic segments vary slightly in usage of financing channels
                                                                                                                                                                                              • Figure 74: Type of purchase method of new/used vehicle, by Mosaic segment, April 2009-June 2010
                                                                                                                                                                                            • Affluent segments more inspired about cars
                                                                                                                                                                                                • Figure 75: Attitudes and opinions about automobiles, percent who agree with statement, by Mosaic segment (part 1), April 2009-June 2010
                                                                                                                                                                                                • Figure 76: Attitudes and opinions about automobiles, percent who agree with statement, by Mosaic segment (part 2), April 2009-June 2010
                                                                                                                                                                                              • Affluent sectors likely to be well informed financially
                                                                                                                                                                                                • Figure 77: Attitudes and opinions about personal finance, percent who agree with statement, by Mosaic segment (part 1), April 2009-June 2010
                                                                                                                                                                                                • Figure 78: Attitudes and opinions about personal finance, percent who agree with statement, by Mosaic segment (part 2), April 2009-June 2010
                                                                                                                                                                                            • Appendix—Trade Associations

                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                              • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                                              • Automotive Aftermarket Industry Association
                                                                                                                                                                                              • Automotive Industry Action Group (AIAG)
                                                                                                                                                                                              • Automotive Oil Change Association (AOCA)
                                                                                                                                                                                              • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                                              • Bank of America Corporation
                                                                                                                                                                                              • BMW of North America, LLC
                                                                                                                                                                                              • Bureau of Economic Analysis
                                                                                                                                                                                              • Chrysler LLC
                                                                                                                                                                                              • Citibank
                                                                                                                                                                                              • Connected Vehicle Trade Association (CVA)
                                                                                                                                                                                              • Ford Motor Company (USA)
                                                                                                                                                                                              • General Motors Corporation
                                                                                                                                                                                              • HSBC USA Inc.
                                                                                                                                                                                              • Hyundai Motor Company
                                                                                                                                                                                              • Insurance Information Institute Inc.
                                                                                                                                                                                              • J.D. Power and Associates
                                                                                                                                                                                              • Liberty Mutual Holding Company Inc.
                                                                                                                                                                                              • Mazda North American Operations
                                                                                                                                                                                              • Mercedes-Benz USA
                                                                                                                                                                                              • Mitsubishi Motors North America, Inc.
                                                                                                                                                                                              • National Automobile Dealers Association (NADA)
                                                                                                                                                                                              • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                                                              • Nissan North America, Inc.
                                                                                                                                                                                              • Rubber Manufacturers Association (RMA)
                                                                                                                                                                                              • The Conference Board
                                                                                                                                                                                              • Tire Industry Association
                                                                                                                                                                                              • Toyota Motor Corporation USA
                                                                                                                                                                                              • U.S. Bureau of Labor Statistics
                                                                                                                                                                                              • US Department of Commerce
                                                                                                                                                                                              • Volkswagen of America, Inc.

                                                                                                                                                                                              Vehicle Financing - US - December 2010

                                                                                                                                                                                              £3,174.67 (Excl.Tax)