Shopping for Your First Set of Wheels? Take This Pop Quiz to Learn if You're Ready
Vehicle Financing Education Group Offers Help During National Financial Literacy for Youth Month in April
WASHINGTON, April 6 -- Young adult first-time car or truck buyers often don't know where to begin when making what is likely the first major purchase of their lives, according to AWARE (Americans Well-informed on Automobile Retailing Economics), a national consumer education campaign sponsored by members of vehicle finance industry. As part of National Financial Literacy for Youth Month in April, AWARE wants to help first-time auto buyers better navigate the financing system.
"As a first step into the rest of their financial lives, it is vital that young people take this subject seriously," says Eric Hoffman of AWARE. "Our research has shown that 6 out of 10 Americans are doing their homework on the car itself, but 3 out of 4 admit that they do no research on auto financing or even check their credit. Particularly for first time car buyers, this has to change."
To mark the beginning of National Financial Literacy for Youth Month, AWARE is challenging young auto shoppers to take the following "pop quiz" to see if they're ready to head to the showroom.
1. Do you have a budget? If you don't already have a budget, now is the
time to create one. This will help you determine how much car you can
actually afford. Don't forget to factor in vehicle related costs
outside of a new car payment, particularly insurance costs. Premiums
for many young drivers are significantly higher, sometimes as much as
the monthly car payment. Other outside costs to consider include
maintenance, gas and taxes, which can all be significant if you forget
to plan for them.
2. Have you pulled your credit report? Your credit history may affect the
finance rate you are able to secure, so it's a good idea to get a copy
of your free credit report before heading to the dealer. This way,
you'll know what creditors will see before they do. And, it will give
you a chance to try to correct any errors on your report. Go to
http://www.annualcreditreport.com/ for yours.
3. Have you shopped around? Do some homework before you decide which car
to buy and where to buy it. Call your bank or credit union. Talk to
dealerships. Print out all quotes and keep them in a folder that you
bring with you when you shop for the car. In the end, however, whether
you finance through your dealer or elsewhere, there typically are no
penalties to refinance if you're not satisfied.
4. Do you know how finance rates are determined? Vehicle financers use a
number of factors to determine the finance rate they will offer you.
Typically, they review your credit score, which is based on an
automated analysis of your credit history. Other factors that may
affect the financing offer include: the price of the vehicle you would
like to purchase, the availability of manufacturer incentives, the
amount of your down payment, your debt repayment options, and the
length of the finance contract. The rate offered to you may be
negotiable.
5. Is there someone you could ask to be a co-signer if needed? If you are
under the age of 18, are currently not employed, do not have a credit
history, or your credit history is not good, you may need a responsible
person to co-sign the finance contract for you.
6. Do you know the difference between leasing and financing? Know what an
APR is? Credit insurance? Guaranteed Auto Protection? You need to
educate yourself on these terms, and understand the value and price of
aftermarket products. If you don't want something, don't sign for it.
A good glossary of terms can be found at
http://www.autofinancing101.org/ under "Resources."
"If you answered 'no' to one or more questions, go back and hit the books before you buy a car or truck," Hoffman said. "Consumers, especially those at the beginning of their financial lives, need to be vigilant about understanding the vehicle financing process. If you make mistakes along the way, they can follow you for years. Get smart before you sign on the dotted line."
AWARE (http://www.autofinancing101.org/) was formed to build a greater understanding among consumers about how auto financing works. The group aims to ensure that potential buyers of new and used autos have the tools and resources they need to successfully navigate the auto financing process. AWARE focuses exclusively on educating consumers on vehicle financing in a web environment free of advertising or lead generation sales tactics.
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 Services North America Ford Motor Credit Company General Motors Acceptance Corporation (GMAC) Group 1 Automotive, Inc. Jaguar Credit Land Rover Capital Group Lithia Motors Mazda American Credit Mercedes-Benz Credit National Auto Finance Company Nuvell Financial Services Corp. Saab Financial Services Corp. Sonic Automotive, Inc. Toyota Financial Services United Auto Group, Inc. Volvo Car Finance North America Wells Fargo Auto Finance