Canadian banks are providing a greater share of new-vehicle loans to consumers, through dealers, according to the just-released J.D. Power and Associates 2012 Canadian Dealer Financing Satisfaction Study.
The volume of loan business that dealers are sending to banks is increasing in line with dealers' satisfaction with the banks' service.
Dealer financing satisfaction with banks has increased to 872 (on a 1,000-point scale) in 2012, up 25 points from 847 in 2011. That's greater than their satisfaction with captive financing companies – finance companies owned by the automotive manufacturers – which is at 840.
Banks' share of the dealer financing business has increased to 60.5% in 2012, up 4.7% from 2011. The captive market share has dropped to 36.3%, down 1.5% from 2011.
"Auto lending is a very competitive market, and we're finding that more dealers this year are using multiple providers, particularly bank providers, than in 2011," said Lubo Li, senior director and financial services practice leader at J.D. Power and Associates, Toronto.
"Banks are continuously improving their offerings and improving the dealer lending experience," he adds.
For dealers as well as buyers, speed in processing a loan or lease application is crucial. Dealers find banks more frequently are able to provide funding in 24 hours or less than are captive providers – 84 % and 56%, respectively.