Preparation Is the Name of the Game for First-Time Car Buyers

WASHINGTON,--June 7, 2012: New graduates need to conduct as much research when shopping for their first car as when preparing for a job interview, according to AWARE (Americans Well-informed on Automobile Retailing Economics). As with any major purchase, buying a car is a detailed process. Knowing some basic terms, what's in your credit report, how much you can afford each month and which vehicles are in your price range can help you navigate the process.

"Buying a car is the first major financial decision that many young adults make, and the choice will be with them for several years," said AWARE spokesman Eric Hoffman. "Preparing themselves by learning about the process, financing options, and basic terms can increase their comfort level."

AWARE offers some basic car-buying tips for new graduates:

Determine What You Can Reasonably Afford

*	Create or review your budget to determine if you have sufficient
income to take on an additional monthly obligation. Make sure to account
for costs such as insurance, maintenance, parking, and taxes.
*	Use AWARE's online calculator Auto Financing 101 to
determine an estimated monthly payment.

 
Understand Key Terms

*	Annual Percentage Rate (APR) - the cost of credit for one year
expressed as a percentage.
*	Amount Financed - the dollar amount of the credit that is
provided to or on behalf of the buyer.
*	Finance Charge - the dollar amount that the credit will cost the
buyer. It includes interest and other charges related to the extension
of credit.
*	Lien - A legal interest in the vehicle (collateral) given to the
creditor by the buyer, which entitles the creditor to repossess and sell
the vehicle if the buyer does not make payments or meet other
obligations owed to the creditor. 
*	Dealer Financing or On-Site Financing - financing that a buyer
obtains from the dealership to buy a new or used vehicle.
*	Off-Site Financing - financing that a buyer obtains at a bank,
credit union or other financial institution to buy a new or used
vehicle.

 

Shop Smart

*	Compare financing offers.
*	Understand the differences between buying and leasing, and
choose the option that is best for you. Visit
Federal Reserve Publications for more information.
*	Negotiate financing terms to meet your needs.
*	Do not sign a contract that you have not read or that contains
blank spaces.
*	Ask questions about optional products like extended service
contracts, credit insurance, and guaranteed auto protection, and only
sign up for the products you want.

AWARE is a vehicle financing industry coalition to help consumers understand how auto financing works. The group provides potential buyers of new and used autos with the tools and resources they need to successfully navigate the auto financing process. AWARE's members include: American Financial Services Association, National Automobile Dealers Association, National Association of Minority Automobile Dealers, American International Automobile Dealers Association, Ally Financial, American Honda Finance Corp., American Suzuki Financial Services, AutoNation, Ford Motor Credit Company, GM Financial, Group 1 Automotive, Inc., Lithia Motors, National Auto Finance Co., Nissan Motor Acceptance Corp., Saab Financial Services Corp., Sonic Automotive, Inc., Toyota Financial Services, United Auto Group, Inc. and Wells Fargo Dealer Services.