Three out of four consumers do not research financing options before making what is, quite possibly, the second largest purchase of their lives, according to a study from Americans Well-informed on Automobile Retailing Economics (AWARE).

AWARE is a group of vehicle financing industry leaders that have joined together to enhance consumer understanding of the auto financing process. F&I Magazine is an Education Ally of the organization.

AWARE suggests that consumers consider the following when researching a new vehicle purchase:

1. Determine what you can afford. If you haven’t already done it, now is the time to create a budget for your family. When trying to determine a comfortable monthly car payment, be sure to adjust other costs as well — insurance, gas and maintenance costs might be different than what you’re paying now, for example.

2. Learn what affects your finance charge. 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.

3. Review your credit report. This way, you will know what creditors will see before they do. This will give you an opportunity to try to correct any errors on your report, and to know if you will be considered a good credit risk. Go to www.annualcreditreport.com for yours.

4. Educate yourself. Learn the difference between leasing and buying. Know the meaning of terms such as "APR," "Guaranteed Auto Protection" and fixed versus variable rate financing. Visit http://www.autofinancing101.org/resources/glossary.asp for a good glossary of financing terms.

5. Research your options. Knowing what financing options are available to you will put you in the best decision-making seat. Call your bank or credit union; talk to dealerships; consider options such as a home equity loan. The current vehicle financing system is intensely competitive, so dealers and other financing sources have every incentive to offer you a competitive rate or risk you going elsewhere. In the end, however, whether you finance through your dealer or elsewhere, there typically are no penalties to refinance if you’re not satisfied.

6. Focus on the overall package. Make a list of pros and cons for every option, including how long you’ll be paying, the total amount you’ll pay over time, how much cash or trade in value can be put toward a down payment, the APR, and any manufacturer incentive programs. In the end, be sure to consider the whole package offered, and not just the monthly payment.

7. Apply for credit within a focused period of time. Generally speaking, multiple credit inquiries can adversely affect your credit score — but not if you limit your applications for auto financing within a 14-day period. Shopping around for vehicle financing may cause multiple lenders to request your credit report, even though you’re only looking for one source of credit. To compensate for this, credit scoring software counts multiple auto financing inquiries in any 14-day period as just one inquiry. Additionally, vehicle financing inquiries made in the 30 days prior to scoring are ignored, so your score won’t be affected while you’re shopping.