 Auto
Industry Leaders Offer Tips on Financing Your Vehicle
With
new car and truck models rolling onto dealer lots and
plenty of good deals to be found, millions of Americans
will be looking to acquire a new or used vehicle this
year. Americans Well-informed on Automobile Retailing
Economics (AWARE), a group of automotive industry leaders
that have joined together to educate consumers about
vehicle financing, offers the following tips to help
consumers navigate the vehicle financing process.
Before visiting the dealership:
- Evaluate
your financial situation and determine how much you
can afford to pay. A list of online auto financing
calculators can be found here.
- Check
out auto buying guides, the Internet and other sources
to determine a realistic price range for the auto
you are thinking of buying.
- Understand
the differences between buying and leasing an auto.
"Keys
to Vehicle Leasing", a publication of the
Federal Reserve Board, provides useful information
on this topic.
-
Get a copy of your credit report so you can correct
any errors and be aware of what creditors will see.
All consumers may obtain a free copy of their credit
report annually here.
- Compare
annual percentage rates and financing terms from multiple
sources such as banks, finance companies, and credit
unions.
When
shopping for an auto at the dealership:
- Stay
within the price range you can afford.
- Negotiate
your finance arrangements and terms just as you negotiate
the price of the vehicle.
- Understand
the value and cost of optional products such as extended
service contracts, credit insurance, or guaranteed
auto protection. Don't sign for products you don't
want.
- Read
the contract carefully before you sign it. Ask questions
about anything you don't understand.
After completing the auto purchase or lease:
- Make your payments on time. Late or missed payments incur late fees and appear on your credit report, which can impact your ability to get credit in the future.
- If you financed the vehicle, be aware that the bank or finance company that bought the financing contract from the dealership holds a lien on the auto title (and in some cases the actual title) until you have paid the contract in full.
- If you have difficulty making your payments, talk to your creditors. Work out a repayment schedule and, if needed, seek the services of a non-profit credit counseling agency.
Today, the most common type of vehicle financing is "dealership financing" — where a buyer and a dealership enter into a contract where the buyer agrees to pay the amount financed, plus an agreed-upon finance charge, over a period of time. The dealership may retain the contract, but usually sells it to a bank, finance company or credit union, which services the account and collects the payment. Last year alone, more than 40 million auto financing transactions were arranged through dealerships.
AWARE, formed by a group of auto dealer and financial services company leaders involved with vehicle financing, provides consumers with the information, tools and resources they need to make informed decisions when financing a vehicle. AWARE's membership includes the American Financial Services Association, National Automobile Dealers Association, National Association of Minority Automobile Dealers, American International Automobile Dealers Association, American Honda Finance Corporation, DaimlerChrysler Services North America, General Motors Acceptance Corporation, Ford Motor Credit, Toyota Financial Services, Wells Fargo Auto Finance, AutoNation, Lithia Motors and other auto dealers.
Additional information on AWARE, along with other vehicle financing tools and resources, is available in English and Spanish at www.autofinancing101.org.
(Source: AWARE)
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