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Survey Shows Consumers Want More Auto Finance Education in Tight Economy

American consumers' satisfaction with auto financing remains high while their interest and desire to learn more about the financing process has held steady despite the sluggish economy, according to findings in a new public opinion survey by AWARE, a nonprofit auto financing education group.

by Staff
October 30, 2008
5 min to read


WASHINGTON -- American consumers' satisfaction with auto financing remains high while their interest and desire to learn more about the financing process has held steady despite the sluggish economy, according to findings in a new public opinion survey by AWARE, a nonprofit auto financing education group.


The survey, which measured consumers' auto financing knowledge and experience, also found that many borrowers facing difficult financial circumstances are not aware of the ways that their creditor can help get them back on track.

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This is the second national survey by AWARE (Americans Well-informed on Automobile Retailing Economics) that measured consumers' auto financing behaviors and perceptions. While the questions in the 2006 and 2008 surveys were very similar, the recent economic downturn provides insight into how consumers' perceptions and behaviors with auto financing have changed or remained the same in the past two years.


This year's survey revealed that more consumers have delayed purchasing a new car or truck when compared to two years ago. In 2006, 40 percent of consumers said they had purchased a car within the last two years. In this year's survey, 32 percent reported purchasing a car or truck within the last two years. Consumers reported similar findings regarding their future purchases. In 2006, 51 percent said they were planning to purchase a new automobile within the next three years, while this year's survey shows 45 percent of consumers plan to do so.


Even with a slowdown in auto purchases, consumers -- especially those who report to be informed about auto financing -- say they are satisfied with their financing decisions and the outcome of the process.


Ninety-one percent of consumers said they were satisfied with their most recent vehicle financing. And of those who reported they were educated about the process, 93 percent expressed satisfaction compared with 87 percent of consumers who said they were satisfied but not educated about auto financing.


High satisfaction numbers hold true for those who financed at a dealership compared to other lending sources. 90 percent of educated consumers said they were satisfied with their dealership financing, while 86 percent of self-reported uneducated consumers said they were satisfied.

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"Regardless of restrictions in the availability of credit, Americans -- especially those who have done their homework -- remain highly satisfied with their vehicle financing experience," said Eric Hoffman, spokesperson of AWARE. "This underscores the importance of maintaining personal financial literacy efforts that focus on auto financing. Educated consumers become satisfied consumers, which leads to repeat customers and that's important in such a competitive marketplace."


Despite auto industry's auto financing education efforts through AWARE as well as individual company programs, the new AWARE survey demonstrates more robust education efforts need to be put forth for consumers facing economic hardship. Only 47 percent of consumers believe that finance companies often work to help customers who are having trouble making payments while 21 percent reported they weren't sure.


"Two-thirds of consumers in our survey know that finance companies would rather keep their customers in their cars than repossess them," Hoffman said. "But consumers don't know how to work with their creditor if they are falling behind on payments. So, we have a knowledge gap that consumer educators, such as AWARE, must bridge.


Other highlights of the research include:


- Fewer consumers are financing vehicle purchases than this time two years ago. Applications dropped from 29 to 22 percent.

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- Consumers value education more in a tightening economy. Eighty-six percent of respondents said the current economy means it is even more important for them to be knowledgeable about their financing options.


-Homework trends remain steady. Nearly one in four (or 24 percent) recent vehicle financing consumers said they spent less than three hours researching financing options, while another one in four (27 percent) said they did more than three hours of homework before applying for financing.


- Education and awareness levels hold strong. Fifty-seven percent of consumers said they were informed about the auto financing process, no change compared to 58 percent of respondents two years ago. Eighty-two percent said they will set a budget before their next vehicle purchase, 87 percent said they would negotiate the price of their next vehicle, 66 percent said they'd research financing options, and 67 percent said they would negotiate their financing.


- People want to understand their contracts better. Forty-two percent said they would benefit from learning to read and understand their contract as compared to 34 percent in 2006, with Hispanics showing the greatest increase in wanting to know more about this area of auto financing -- 53 percent in 2008, compared to 38 percent in 2006.


- Negotiating skills and finding competitive finance rates key to consumers. Similar to 2006, 25 percent of consumers also said they would benefit most by learning how to negotiate financing rates and 20 percent said finding competitive financing rates.

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- Consumers want flexibility in lending options. A third (or 33 percent) would prefer to reduce their monthly payments even when knowing that it will increase the amount of time that the vehicle is worth less than the amount owed on the loan.


"Consumers have myriad options available to them when it comes to auto financing. Similarly, if consumers are facing a tough time financially, we encourage them to work with their creditor," Hoffman said. "Being an educated consumer not only helps when it comes to financing a vehicle, but also when times are tight."

Topics:F&I

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