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USAA: tops in auto loans
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November 29, 2000: 6:22 p.m. ET
Customers in J.D. Power survey name Texas-based bank top auto loan provider
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NEW YORK (CNNfn) - New vehicle buyers rated USAA Federal Savings Bank highest in overall customer satisfaction among loan finance providers for the second year in a row, according to a study released Wednesday.
Market research and consulting firm J.D. Power and Associates said the San Antonia, Tex.-based company took the No.1 spot in its Consumer Financing Satisfaction Study, which is based on responses from nearly 40,000 consumers who recently purchased or leased a new vehicle.
"USAA, which serves its customers via telephone and computer, continues to garner kudos for the quick, easy and friendly service they provide," David McKay, director of auto finance research for J.D. Power and Associates, said in a statement.
Following USAA in initial loan satisfaction are Infiniti Financial Services and Lexus Financial Services. Jaguar Credit ranks highest in initial lease satisfaction, followed by Mercedes-Benz Credit and BMW Financial Services.
The new vehicle market continues to attract additional types of lending institutions, the marketing firm said. Last year's study introduced dealer-operated finance companies and insurance companies. In the 2000 study, a new group of companies that primarily provide financial services via the Internet, though still small, have become large enough to be identified as a unique segment of the market.
McKay said Internet financing companies score very well in consumer satisfaction because they "offer competitive interest rates and they're very convenient for many consumers who can shop for an auto loan without leaving their homes."
Last shall be lease?
While the number of auto lenders continues to grow, the survey found many of them are shying away from financing auto leases. At the same time, the number of consumers leasing new vehicles continues to decline, falling from 29 percent in 1998, to 26 percent in 1999 and to 23 percent in 2000.
"Many banks and independent finance companies have abandoned new-vehicle leases because their residual exposure was too great," McKay said, adding that low residual values for vehicles at the end of the lease have soured the appeal of leases for financing companies.
"To protect themselves against future losses, lessors are more selective in the customers they choose to finance," McKay said. "These companies are also looking for longer lease terms -- generally three to four years. This is because they are more accurate in predicting residual values for vehicles that are three or four years old than they are of vehicles returned after a 24-month lease."
The study also reveals that consumers, whether they purchase or lease their new vehicle, have certain expectations of their financial institution. To meet these expectations, auto finance providers need to set up the loan or lease correctly, bill their customers accurately and in a timely fashion and -- most importantly when it comes to customer satisfaction -- give their customers a sense that they got a good deal for their money.
"Value has become more important over time due to a combination of factors such as incentives, lease rates and consumer perception of the finance and insurance manager or loan officer," McKay said. "These factors, together with rising consumer expectations, have put increasing pressure on auto finance companies to provide excellent service to their customers."
The customer satisfaction process doesn't stop after the loan or lease is signed. Nearly one quarter of consumers contact their provider's service center for such things as billing questions, account balances or interest rates.
"Consumers expect to be able to contact their loan or lease provider easily," McKay said. "They expect a courteous, knowledgeable and responsive service representative who understands their needs. They want their questions answered and they don't want to spend a lot of time on the phone." 
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