Press Release

Auto Industry Leaders Offer Tips on Financing a New or Used Vehicle

 

Washington, D.C., Oct. 11, 2005 — With new 2006 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 fall.  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 at www.autofinancing101.org/resources/links.asp.
  • 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” (www.federalreserve.gov/pubs/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.  As of September 1, all consumers may obtain a free copy of their credit report annually.  Consumers can request their free annual credit reports via the Internet at www.annualcreditreport.com, by calling 1-877-322-8228, or by mailing requests to Annual Credit Report Request Service, P.O. Box, 105281, Atlanta, GA 30348-5281.

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. If you don’t want these products, don’t sign for them.
  • 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, finance company or credit union 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 monthly payments, talk to your creditors.  Work out a repayment schedule and, if necessary, 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.

Contact:
Amy Thompson
(866) 693-4464 or
(202) 285-2997