AFSAEF, NADA Release Updated Version of "Understanding Vehicle Financing"
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WASHINGTON, February 8, 2007 . . . The trade associations for the nation's auto lenders and franchised new car and truck dealers today released an updated version of "Understanding Vehicle Financing," a brochure to help educate consumers on the basics of vehicle financing.
"Understanding Vehicle Financing," originally produced in 2003 by the American Financial Services Association Education Foundation (AFSAEF) and the National Automobile Dealers Association (NADA), and prepared in cooperation with the Federal Trade Commission (FTC), provides fresh information to help consumers learn about dealership financing and evaluate their own financial situations before financing a new or used vehicle. It also addresses vehicle leasing.
The brochure's components include:
* A checklist of recommended actions to take before, during and after visiting the dealership; * A worksheet to determine a monthly payment amount that the borrower can afford; * A worksheet to allow borrowers to compare terms from up to three creditors; * A glossary of common vehicle financing terms; * A revised list of federal laws regulating dealership financing and leasing; and * New information on the process of obtaining a credit report.
More than 300,000 copies of the brochure have been distributed in English and Spanish since its creation four years ago. "Without question, this joint project has benefited many car and truck buyers,"
said Susie Irvine, president and chief executive officer of AFSAEF. "While individual lending companies have produced some excellent materials over the years, 'Understanding Vehicle Financing' is a comprehensive, industry wide education initiative."
"We are pleased to continue working with auto lenders in an effort to educate the public on one of the most important aspects of the vehicle-shopping process - financing," said Dale Willey, NADA chairman. "Building consumer awareness in this area is a top priority for NADA, and this brochure helps a great deal in that process."
The FTC includes "Understanding Vehicle Financing" among a list of consumer resources posted on its Web site (www.ftc.gov). Consumers also may obtain a free copy of the brochure by downloading it from AFSAEF's Web site (www.afsaef.org), calling the Foundation's toll-free phone number (888-400-7577) or by sending a request to: AFSAEF, 919 18th Street, NW, Dept. UVF, Washington, DC 20006. Organizations interested in bulk orders should contact the Foundation or visit its Web site for pricing information.
In addition to their collaboration on "Understanding Vehicle Financing," AFSA and NADA are co-leading efforts for Americans Well-informed on Automobile Retailing Economics (AWARE), whose members include several major vehicle financing companies and dealers. Among AWARE's initiatives is www.autofinancing101.org <http://www.autofinancing101.org/> , a comprehensive Web site providing a variety of vehicle financing resources and tools for consumers.
Excerpt from "Understanding Vehicle Financing" Remember . . . Before Visiting the Dealership: * Evaluate your financial situation and determine how much you can afford to pay each month. A longer-term finance contract may mean smaller monthly payments than a shorter-term finance contract (if all other terms are the same) - but will result in more money paid over time on your contract. * Determine the price range of the vehicle you're thinking of buying. Check newspaper ads, the Internet, and other publications. * Understand the value and cost of optional credit insurance if you agree to purchase. * Know the difference between buying and leasing a vehicle. * Be aware that your credit history may affect the finance rate you are able to negotiate. Generally, you'll be able to get a lower rate if you've paid your monthly credit obligations on time. * Compare annual percentage rates and financing terms from multiple finance sources such as a bank, finance company and credit union. This information may also be available from the finance sources' and vehicle manufacturers' Web sites. When Visiting the Dealership: * Stay within the price range that you can afford. * Negotiate your finance or lease arrangements and terms. * Consider carefully whether the transaction is best for your budget and transportation needs. * Understand the value and cost of optional products such as an extended service contract, credit insurance or guaranteed auto protection, if you agree to purchase. If you don't want these products, don't sign for them. * Read the contract carefully before you sign. You are obligated once you have signed a contract. After Completing the Vehicle Purchase or Lease: * Be aware that if you financed the vehicle, the assignee (bank, finance company or credit union that purchases the contract) holds a lien on the vehicle's title (and in some cases the actual title) until you have paid the contract in full. * Make your payments on time. Late or missed payments incur late fees, appear on your credit report and impact your ability to get credit in the future. If You Encounter Financial Difficulty: * Talk to your creditors if you experience difficulties making your monthly payments. Explain your situation and the reason your payment will be late. Work out a repayment schedule with your creditors and, if necessary, seek the services of a non-profit credit counseling agency. * Know your obligations. Repossession can occur if you fail to make timely payments. A creditor or assignee may take the vehicle in full satisfaction of the credit agreement or may sell the vehicle and apply the proceeds from the sale to the outstanding balance on the credit agreement. This second option is more common. If the vehicle is sold for less than what is owed, you may be responsible for the difference. * Be aware that the law in some states allows the creditor or assignee to repossess your vehicle without going to court. Sources: AFSA Education Foundation, National Automobile Dealers Association, Federal Trade Commission
