The Life Cycle of Car Buying
The process of buying a car is a lot like any other "life-cycle", there are definite stages involved in every auto purchase. These stages start with the thought to buy a new auto, and conclude with ownership transfer of the auto.
At myAutoloan.com we have identified four key areas that make up the Auto-buying Life cycle process: Research, Finance, Buy and Drive. Each of which is only one-click away from supplying important user information in the auto-buying process.
Auto Buying Life Cycle: Research
Research is where the Lifecycle truly begins and often the first opportunity to "wow" the potential customer with everything they need: resources (tools) to take the hassle out of financing and buying their next auto. Customers have numerous questions and concerns to be addressed: Should I buy or lease? Do I need or want an auto or a truck? Would a sports car or SUV better fit my family's needs? What about safety? Have there been recalls of this auto? How does it compare to another model that I like? What's the right auto for me? How much can I afford? What will my payments be? What interest rate can I afford based upon my credit history? What about the cost of insurance for the auto that I want? Is there value for me to obtain a service contract? How much trade-in value can I expect to receive if I trade my current auto?
myAutoloan.com will make available to the consumer free value-based tools such as Loan Amount, Payment Amount, and Affordability Calculators. It will provide Vehicle Valuation Guides, New Auto Configuration Guides, Auto Crash Test Data, Manufacturer Rebate and Incentives service tools. The site will include information concerning Manufacturer Maintenance and Cost Schedules based upon reliable estimates of similar services.
Not every customer visiting the web site will be ready to finance and buy their next auto in that session. Our site is designed to attract and keep shoppers! They will be using, returning and referring friends to the site (termed "site stickiness"). "One in four online shoppers buys within three months", meaning "an online shopper is at least as hot of a lead as a showroom visitor", Forrester Research Article; December, 2001. Whether shoppers are financing and buying today, next month or next year, they will recognize the value of myAutoloan.com and build up confidence in our site over time. We will provide our prospective customers an easy-to-use process for information gathering from our financing alliance providers. Doing so will enable myAutoloan.com to have a realistic opportunity to finance their current purchase, refinance an existing auto and/or to finance future auto purchases. As we grow, allowing storage of information researched, application details, approvals and resource data will build customer loyalty and strengthen customer retention.
Auto Buying Life Cycle: Finance
Finance, the next logical step in the Lifecycle is the core of myAutoloan.com. Before you buy an auto or truck, it is best to have the money available for the purchase in order to command the best price from the dealer. myAutoloan.com empowers the consumer! Direct financing acts as "same as cash" in hand when the consumer walks into the dealership. Being pre-approved provides leverage to the customer during the transaction, which refocuses the attention to the negotiation of net price of the auto. The customer is not faced with the question of being approved by the dealer finance department and has more control over the entire purchase situation. The customer is no longer bounced between the dealership's salesperson, Sales Manager and the Finance/Insurance Manager, hearing the oft-quoted phrase "let me run this past my manager" as they wait to see if they can get the desired auto. In an article by the Consumer Federation of America, "The Hidden Markup of Auto Loan", they provide numerous facts from a recent study. Here are the facts:
• On new autos, African-Americans pay on average an annual rate of 9.01%, as compared to 7.38% for all households
• On used autos, African- Americans pay on average an annual rate of11.03%, as compared to 10.15% for all households
• Hispanics pay an average annual rate of 8.52% on new car loans, as compared to 7.38% for all other households
• On used autos, Hispanics pay on average an annual rate of10.85%, as compared to 10.85% for all households
The report goes on to say:
When an auto dealer marks up a borrowers "buy rate" in a loan from an auto manufacturer's captive lending company or bank, the difference created by the finance markup charge comes out of the consumers pocket over the life of the loan, yielding a kickback to the dealer. The process of the markup and the kickback involves three steps. First, lenders authorize the auto dealer to markup the buy rate of auto loans. Second, the dealer adds a markup of percentage points on an auto loan, when they assist a consumer in arranging an auto loan. Third, and finally, lenders pay a kickback to a dealer on a monthly basis representing most of the markup of all the loans the dealer has written for that lender.
So what does all this say? It strongly suggests that consumers can save a substantial amount of money if they get a direct loan, do the leg work themselves, which means the simply way is to go online and apply for a direct loan. The saving can be an average of $1,500 on the life of the loan up to amounts that have been shown to be up to $9,000. Here is another example:
"On an auto purchased with a $26,153.00 loan, a 72-month term, and 8.5% buy rate, and an 11.5% loan rate, the total cost to the consumer is more than $36,000 dollars. The kickback from the markup of $2,849.67 comes on top of a flat 50-150 fee already paid by the lender to the dealer for preparing the paperwork." (Source: The Hidden Markup of Auto Loans, January 26, 2004, Consumer Federation of America)
Instead of varying interest rates, terms and conditions determining the net sales price, the customer eliminates the games that can be played. It empowers the customer to obtain the best price of the auto, knowing that they have a pre-approval of an acceptable financing arrangement.
The consumer's credit application and approval process is designed to be fast, simple, secure and convenient, taking the hassle out of financing and purchasing their desired automobile. With a multiple lender platform, the consumer will get the best deal available. myAutoloan.com places the consumer's credit application with the lenders best matched to their credit history, enhancing the approval probability with competitive rates, term and payment arrangements without the customer paying inflated and marked up dealership commissions on financing and the sales transaction. Additionally, the myAutoloan.com website offers the consumer additional value-based content with Credit Tips and Advice and personal Credit Reports. Storage of this information allows for easy retention and recall.
Auto Buying Life Cycle: Buy
The "Buy" is the third step in the Lifecycle as customers think, "I've researched and determined the auto I want and my financing is secured – I have more leverage as an empowered consumer! Now, where should I go to get a great deal and how will I know if I'm getting a fair price for the auto I want to buy, as well as for my trade-in?"
myAutoloan.com believes in consumer empowerment. However, the dealership controls the buying process and will have significant influence in the face-to-face interactions with the customer. myAutoloan.com will provide consumers with positive dealer-based content such as Dealer Locator, Dealer Referral to preferred dealers, and Dealer to Consumer Incentives, Dealer Advertising, Dealer Partnerships and Online Dealer Inventory. The advantage of myAutoloan.com continues by being able to store researched information allowing for expanded retention and recall.
Our goal is to be viewed by dealerships as an advocate. We want to build trust through ease of information gathering and financing, thus allowing a positive auto purchase transaction to unfold.
Auto Buying Life Cycle: Drive
The final step in the Auto-buying Lifecycle is the "Drive" phase. "Now that I've financed and bought my automobile, what about insurance, a service contract, maintenance and service, motor clubs, and aftermarket parts?"
myAutoloan.com will provide value-based content, products and services the customer will want and need throughout their ownership period. Information, products and services such as manufacturer recall notices, service due reminders, manufacturer maintenance schedules, insurance, service contracts, aftermarket parts, motor clubs and service discounts will be provided. We build customer retention by bringing the customer full-circle to the point when they're ready to Research, Finance, Buy and Drive their next auto.
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