Monthly Payment Trumps Vehicle Sales Price for Consumers, but Majority of Online Payment Calculators Get It Wrong

Foothill Ranch, Calif. – January 24th, 2023 – A new snapshot survey of auto dealers, from automotive FinTech innovator eLEND Solutions, confirms that the amount of a monthly vehicle payment is more important to today’s car buyers than the overall vehicle selling price. As the survey reveals, this creates a significant challenge for the nearly 70% of dealers who use online tools to quote monthly payments.

The majority of dealers surveyed report that not only are these payment quotes inaccurate over half of the time but, as a consequence, they are driving rehashes and losses in F&I product sales penetration and increasing F&I time delays – by an additional 15 to 30 minutes say the majority.

Dealers in the online snapshot survey, fielded by eLEND Solutions in December 2022, also report that economic uncertainties are driving a sales pullback, and 80% cite time delay in the F&I office as the greatest obstacle to profits and satisfaction.

“Online calculators are among the biggest of today’s digital retailing traps, offering up monthly payment estimates disconnected from real lender terms and consumer credit profiles that, more often than not, are an illusion, as this survey confirms,” said eLEND Solutions CEO and Founder, Pete MacInnis.

According to the survey, while dealers confirm that payment price is more important than sales price, nearly half acknowledged that calculations from currently available online payment estimators hurt F&I product sales/penetration: 8 in 10 dealers estimate that 60% of their payment calculator quotes are not accurately matched to the final contracted monthly payment amount.

“Affordability is the number one issue for car buyers for 2023¹ and that is fueling a payment focused transaction climate which means quoting accurate monthly payments is critical. Unfortunately, too many dealers are spending precious time rewinding deals that online calculators are supposed to expedite, and the impact on CSI and F&I sales penetration is palpable,” said MacInnis.

One astonishing stat in the survey that might help explain auto dealers’ tolerance for inaccurate payment quotes is that over half of dealers think a realistic monthly quote can be within $50 of the final contracted monthly payment – a monthly amount that, in today’s economic climate, is extremely meaningful and can contribute to loss of F&I penetration. “If a consumer thinks they can afford a vehicle because of the online quote, get their heart set on it, and then find out that the monthly payment is $40 to $50 more, they may still buy that vehicle, but the dealer can say goodbye to warranties and other F&I product sales,” said MacInnis.

Underscoring this point, 88% of dealers estimate that their F&I sales penetration would increase by 10% or more if consumers were quoted qualified payment terms matched to lender fundable contract terms, with dealer mark-ups, before getting to the F&I office.

F&I Sales Penetration Increase with qualified payment terms

5% or more	12%
10% or more	51%
15% or more	32%
20% or more	5%

“Any increase in F&I sales is significant, and a 10% or greater increase can add up to significant profits. The message is clear,” continued MacInnis. “For digital retailing to evolve into profitable modern retailing, dealers need to eliminate the friction of inaccurate payment information and adopt digital pre-desking tools that can instantly match customer and dealer to a waterfall of qualifying lender programs prior to the first pencil or F&I handoff.”

Key Survey Takeaways

• 69% of dealers say that current economic challenges are creating a sales slowdown at their dealership, with ‘Economic Uncertainties” (looming recession/employment anxiety) cited as the top driver, followed by “Rising Interest Rates” and “Low Manufacturer Incentives.”
• The monthly payment is more important to customers today than selling price, according to 46% of dealers, with 23% saying payment and sales price are equally important with only 31% stating selling price as most important.
• 69% agree that payment estimator tools provide an inaccurate or unrealistic monthly payment expectation over 50% of the time.
• 83% report that 60% of their online payment calculator quotes are inaccurately matched to the final contracted monthly payment.
• 47% say that calculations from currently available online payment estimators hurt F&I product sales/penetration.
• 88% of dealers estimate a 10% or more F&I sales penetration increase if consumers were quoted qualified payment terms matched to lender fundable contract terms (with dealer mark-ups), before getting to the F&I office; 37% estimated an increase of 15% or more.
• 52% believe that for online payment calculator tools to be more realistic, the quoted payments should pencil within $50 of the final contracted monthly payment.
• 63% report that one in four of their digital retail-initiated payment terms have to be re-worked because they cannot be matched to the customer's credit profile, final deal structure and lender approvals, with over one third (37%) reporting that half or more of their deals have to be reworked.
• 85% estimate that 15 minutes or more could be saved in the F&I office if customers were quoted qualified payment terms that match lender fundable contract terms (including dealer mark-ups) prior to the F&I handoff, with 32% expecting to save 30 to 45 minutes or more.
• 80% agree that F&I time delay (the time it takes for a customer to move from “Yes, I want to buy the vehicle” to accepting delivery) is the greatest obstacle to profits and customer satisfaction.
• 70% agree that a pre-desking tool that could put the customer in the right vehicle with the right deal structure – matched instantly to a waterfall of qualifying lender programs prior to the first pencil or F&I handoff – would add meaningful value.