Wednesday, Feb. 07, 2007, 07:00 PM UPDATED 11:59 AMBy Nick Zulovich
WASHINGTON, D.C. — Americans Well-Informed on Automobile Retailing Economics recently launched a new Web resource to assist consumers with research in auto financing. The Auto Financing Learning Suite is available in both English and Spanish. AWARE is a nonprofit organization that specializes in auto financing education.
"We strongly believe that by empowering consumers with knowledge, they will make informed decisions about auto financing," explained Eric Hoffman, of AWARE.
"We hope by offering consumers resources such as calculators that factor in trade-in value and worksheets that help auto shoppers compare multiple financing rates, we've taken another important step to help consumers make a decision that is best suited toward their individual circumstances and needs," he added.
The new suite is available for free through AWARE's Web site, , by clicking "Learning Suite" on the top navigation bar. According to officials, the site has four sections, with each providing different tools for consumers:
—Articles, Brochures and Other Resources: This area of the site allows educators and consumers to download material such as a quick reference wallet card on financing; tips on financing; in addition to articles explaining the various aspects of the financing process. This section also offers a glossary of terms and links to guides on vehicle leasing and credit reports.
—Calculators and Interactive Learning: This section specializes in providing consumers with interactive tools such as AWARE's Affordability Gauge, which is an tool that can help consumers compare the real costs of owning and operating various vehicles. This tool can also assist in calculating savings based on the down payment. By visiting this section, consumers can also take AWARE's Auto Financing Tune Up quiz or use calculators to get an idea of monthly payment figures on different units.
—Downloadable Worksheets: In another section on the new site, consumers can download and print worksheets to help them complete a monthly budget and compare financing rate quotes from multiple creditors.
—Resources for Young Adults, Teachers and First-Time Car Buyers: Shoppers in these categories can download AWARE articles geared specifically toward the concerns of first-time buyers. In this area, visitors are also provided links to financial literacy guides for young adults from the Federal Reserve Bank of Dallas and the National Council of Economic Education.
AWARE: Military Members Most Informed about Financing
In a recently study, AWARE discovered that military members appear to be better prepared when it comes to financing than their counterparts in the general population.
AWARE also discovered that individuals in the military, or recently retired from the armed forces, rank the highest in their desire to learn more about auto financing to improve their experience.
The survey found that military members tend to take more time to research financing options than other consumers. For instance, four in 10, or 37 percent, of military consumers who applied for auto financing in the last three years spent three or more hours on research, which according to AWARE is significantly better than consumers nationwide. Only one-quarter, or 26 percent, of the general population did research for more than three hours.
"It is extremely encouraging to see that military service men and women exhibit the same level of discipline when planning for a major purchase as they do in their jobs," Hoffman pointed out. "As in so many aspects of their lives, our military is setting a good example that other Americans would be wise to follow."
The study also revealed that nearly half, or 48 percent, of active or recently retired service men and women intend to purchase a vehicle in the next three years. Moreover, AWARE reported that those in the military are more likely than consumers overall to have applied for vehicle financing in the last three years (50 percent of the military versus 29 percent of the general population.)
Due to the survey findings, AWARE concluded that service members have a higher comfort level than consumers nationwide when it comes to vehicle financing. Three-quarters, or 75 percent, of active, retired military and reserve members said they feel informed about vehicle financing, compared to 58 percent of the general public. Additionally, 52 percent of military respondents said they feel "very informed" about financing options, compared to 36 percent overall.
Interestingly enough, AWARE also discovered that 93 percent of military members understand that an individual's credit history can impact APR and the overall financing package offered when applying for a loan. As for the general population, AWARE said more than one in five, or 22 percent, were not aware of this fact.
"We applaud the massive financing literacy effort being undertaken by all the branches of the military and by the Department of Defense through its Financial Readiness Campaign," Hoffman said.
"Clearly there are signs that this is reaping positive results," he added. "Others looking to enhance basic financial literacy among its constituents should take its cues from these successful programs."
Finally, despite reporting they are well prepared for the financing process, members of the military told AWARE they would like the auto financing industry to offer even more information. More specifically, seven in 10, or 70 percent, are interested in having more information being available, with one-third — 33 percent — very interested in such information.
How Do Illinois Shoppers Fair?
In another recent AWARE survey, the organization found that more than half, or 53 percent, of Illinois consumers will shop around for auto financing from multiple sources prior to making their next auto purchase.
While AWARE noted that Illinois lags behind the national average in this statistic, the organization pointed out that the state recently took a significant jump from 21 percent of consumers who said they compared financing rates for their last vehicle purchase.
According to the group, Illinois consumers score high marks when it comes to auto financing knowledge, with eight in 10 saying they understand their credit history may impact their financing package and APR. Eighty percent of Illinois consumers responded that they know there are many options when it comes to auto financing. Additionally, six in 10 said they feel informed about the financing process, with more than one-third, 34 percent, saying they feel "very informed," according to AWARE.
"Illinois auto shoppers know to do their homework on auto financing and that's good news for consumers, and frankly for the dealers that serve them," explained Pete Sander, president of the Illinois Auto Dealers Association.
"The auto financing industry is highly competitive in Illinois and informed, educated consumers end up being our best customers because they're our happiest customers, which result in repeat business and referrals," he continued. "Clearly, there's room for improvement and we're moving in the right direction."
Despite the recent improvement, AWARE said Illinois consumers have room for yet more growth in their research and financing knowledge. According to the organization's survey, only 18 percent of the state's consumers checked their credit score before shopping, and fewer than half, 45 percent, said they plan to check it for their next purchase.
Moreover, a majority of consumers said they plan to negotiate their financing for their next purchase, 59 percent — compared to the national average of 70 percent.
AWARE found that more than 69 percent of Illinois consumers — 6.3 million — reported they are interested in learning more about the vehicle financing process from the industry. About a quarter of the state's population, or 27 percent, said they are very interested in more information becoming available, with younger consumers and those with moderate income levels topping the list at 79 percent each.
"This research gives us a further glimpse into the needs of consumers in Illinois and shows why Illinois programs like the Chicago Federal Reserve Bank's Money Smart Week and others are so important," noted Hoffman of AWARE.
"It's good news that Illinois auto shoppers are interested in learning more about the vehicle financing process, and we'll continue to work with organizations in Illinois to fill those education needs," he added.
How Informed is the National Population?
As SubPrime Auto Finance News reported last year, AWARE completed a national survey in September 2006 and found that more than eight out of 10 Americans, or 83 percent, know they have many options when it comes to vehicle financing, and 58 percent said they feel informed about the process.
Sixty-seven percent of consumers told AWARE they plan to do more research on financing options when considering their next vehicle purchase. African Americans at 77 percent and Hispanics at 80 percent are the most likely consumers to conduct more research, AWARE said.
Moreover, 54 percent of consumers said they will check their credit score before purchasing their next car or truck, and 64 percent said they plan to compare interest rates from different sources.
AWARE also reported that 70 percent of the national population plan to negotiate financing on their next vehicle.
Overwhelmingly, consumers told AWARE they want more information on auto financing options, with more than 150 million agreeing, or 71 percent. African Americans and young consumers between 18 and 24 topped these ranks at 83 percent and 86 percent, respectively.
Nearly half of all consumers, 47 percent, highlighted "negotiating financing rates" as their first or second choice for what they'd like to learn more about, followed by "finding good rates," at 42 percent.
Consumer agreed that the Internet is their preferred medium for receiving more information about auto financing.
"We recognized early on that consumers preferred receiving information via the Internet. That's why we started our Web site, ," Hoffman concluded.