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J.D. Power and Associates Study Shows Dealer Satisfaction Boosts Business For Financial Providers

August 10, 2006

Westlake Village, Calif.—According to a recent study released by J.D. Power and Associates, finance providers that keep automotive dealerships content stand to gain the most business in the future.

The 2006 Dealer Financing Satisfaction Study showed that providers who offer minimal paperwork, quick application processing and terms that allow customers to afford the monthly payments for their new vehicles, as well as reasonable low-interest rates and appropriate spread between high- and low-risk customers, are favored among dealers.

Forty-two percent of dealers who were “very satisfied” and 21 percent who were “somewhat satisfied” with a finance provider, indicated that they planned to do additional prime retail credit business with that provider over the next year.

One of the ways some providers are helping to simplify the financial process is through e-contracting. Many dealerships expect e-contracting to result in fewer rejected contracts, fewer delays in processing, increased speed of cash flow through faster funding and long-term reductions in contract processing fees.

Despite the apparent upsides of e-contracting, the study found that fewer than 10 percent of auto dealerships are using this technology. The main reasons being that there are too few lenders currently participating, the technology is too new, there are additional costs associated with the software and hardware and that additional training is required for dealership personnel.

The J.D. Power study measured dealer satisfaction with finance providers in five product segments: prime retail credit, retail leasing, floor planning, subprime retail and account management. The study was based on responses from 4,670 dealer principals, surveyed between March and May 2006.

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