New Year's Resolutions for Vehicle Shoppers: Be Diligent in Your Vehicle Financing Decisions
Survey Shows Increased Consumer Desire to Research Auto Financing Decisions
WASHINGTON, Dec. 19 -- Consumers are resolving to conduct more research surrounding their auto financing decisions than they have in the past, according to a public opinion survey conducted earlier this year by AWARE (Americans Well-informed on Automobile Retailing Economics), a nonprofit organization specializing in auto financing education.
According to the survey, 64 percent of Americans plan to compare auto financing rates from multiple sources -- compared to only 20 percent of consumers who, during their last vehicle purchase, compared financing rates from more than one source. Notably, African American and Hispanic adults are most likely to resolve to shop around for their next auto financing package (73 and 71 percent, respectively).
The survey also explored other important components of vehicle financing decision-making, such as checking one's credit. Encouragingly, 54 percent of consumers will check their credit score before shopping for vehicle financing -- a vast improvement over the 17 percent who checked their credit before purchasing their last car or truck. African American and Hispanic adults again ranked the highest in their desire to prepare sufficiently, with 71 percent and 76 percent, respectively, saying they will check their credit score in advance of heading to the dealership.
Many Americans make New Years resolutions to buy a new home or pay down credit card debt but vehicle financing can get overlooked. A vehicle purchase is often one of the largest expenses for a consumer. According to Edmunds.com, the average price of a used car this year was $13,900, with new cars averaging $27,800.
"Our data shows more than half (51 percent) of consumers have plans to purchase a new or used vehicle in the next three years -- and 60 percent of them will finance that vehicle," explains Eric Hoffman, spokesman for AWARE. "Resolving to do more research and compare financing from multiple sources are important resolutions for the estimated 60 million Americans with vehicle financing plans in their future."
Also of note, consumers feel very strongly that budgeting is a vital step prior to making vehicle financing decisions, with 80 percent of Americans saying they intend to create a budget for their next purchase. According to the survey, consumers 25 to 34 years old are the most likely to build a budget with 87 percent answering in the affirmative.
AWARE's Hoffman said that the trends among consumers regarding their future auto financing plans are positive, but "nonetheless room for improvement exists, and as we approach January 1, 2007, we hope consumers resolve to follow through on the actions they indicated they would take."
To help consumers formulate their New Year's auto financing resolution, AWARE reminds car and truck shoppers of the following tips:
Develop a budget: Create a price range and don't go over it. Make sure you factor in vehicle related costs outside of a new car payment, such as insurance, maintenance and gas costs. Get a recent copy of your credit report: If you are financing your automobile, your credit history will affect the finance rate you are able to secure. Therefore, get a copy of your free credit report so you'll know what creditors are seeing when judging your credit worthiness. Go to autofinancing101.org. Read any contract carefully before signing it: Ask questions about anything you do not understand. Make your payments on time: Late or missed payments incur late fees and can even cause your vehicle to be repossessed, permanently. A bad payment record will also appear on your credit report, damaging your ability to get credit in the future.
A host of tools, calculators, articles and other resources to help consumers sufficiently prepare for their auto financing decisions can be found in the "Auto Financing Learning Suite" section of AWARE's Web site (http://www.autofinancing101.org/) -- all AWARE materials are available in both English and Spanish. AWARE was formed to build a greater understanding among consumers about how auto financing works. The group, which was formed by leaders in the auto financing industry, educates consumers in an environment free of advertising or lead generation sales tactics.
The national poll, conducted for AWARE by KRC Research, questioned 3,806 Americans aged 18 and older, from July 5-20.
AWARE's membership includes the following: American Financial Services Association National Automobile Dealers Association National Association of Minority Automobile Dealers American International Automobile Dealers Association American Honda Finance Corporation American Suzuki Financial Services AutoNation DaimlerChrysler Financial Americas Ford Motor Credit Company GMAC Group 1 Automotive, Inc. Jaguar Credit Land Rover Capital Group Lithia Motors Mazda American Credit National Auto Finance Company Nuvell Financial Services Saab Financial Services Corp. Sonic Automotive, Inc. Toyota Financial Services United Auto Group, Inc. Volvo Car Finance North America Wells Fargo Auto Finance