Automobile loans are the third-largest category of household debt for Americans, with 86 percent of consumers obtaining financing to buy a new car. Outstanding car loans in the United States total more than $1 trillion.
While the length of automobile loans is increasing, the duration of vehicle ownership is decreasing. This trend means many consumers are repeating the financing process, sometimes owing on loans after they are no longer driving the vehicle.
Recognizing the need to assist consumers with auto loan decision-making, the Consumer Financial Protection Bureau (CFPB) enlisted our communication scientists to develop a solution for helping consumers make better loan-purchasing decisions based on their personal needs. In response, our team sought to explore the value of design thinking to address this challenge.
Design thinking is a solution-based, action-oriented method for solving problems in creative ways. This method involves adopting a mindset that places people at the heart of a challenge and uses a range of tools and methods—such as ethnographic research, persona development, ideation techniques, and prototype development—for creating and testing solutions.
Our team uses design thinking to help identify new ways to promote positive behavior change and social impact, helping federal agencies better engage with those they serve.
Employing Design Thinking to Help Consumers Make Decisions about Car Loans
We reviewed CFPB’s research on consumer financial behaviors to identify actions that may affect a person’s economic standing, such as not checking one’s credit report and shopping for a car without first exploring financing options.
These behaviors, along with audience characteristics like demographics, psychographic factors, and media exposure, were used to prioritize consumers in urgent need of a car with poor credit as the group that would benefit from assistance in choosing a car loan. To assist these consumers, we developed an online loan cost calculator to help shoppers compare loan options, estimate total loan costs, and avoid potential hidden loan costs.
We conducted co-creation sessions with representative consumers to understand how the tool could best meet their auto shopping needs and identify features that were important to them, such as pop-up tips regarding specific loan types.
Working with a design firm, we developed a prototype and conducted proof-of-concept testing with 200 individuals.
Raising Consumer Confidence and Empowering Better Decisions
Test results showed that 82 percent of the participants felt confident they could identify the best auto loan for their financial situation and 95 percent said they were likely to use the tool the next time they shopped for a car. In addition, 97 percent believed the tool was designed for someone like them.
Our design thinking approach informed the development of CFPB’s loan comparison guide, which walks consumers through the auto financing process to make sure they are receiving the best loan for their situation. With better preparation, consumers will be able to find the right loan for their needs.
