Those in the military tend to have better financing "behaviors" -- such as researching options, checking credit scores, and comparison shopping -- than their counterparts in the general population, according to a new survey by AWARE (Americans Well-informed on Automobile Retailing Economics), a nonprofit organization specializing in auto financing education. At the same time, those in the military -- or recently retired -- rank the highest in their desire to learn more on the subject and improve their overall financing experience.
The survey shows consumers in the military invest more time to research financing a vehicle than consumers overall. Of those military consumers who applied for auto financing in the last three years, four in ten (37 percent) did three hours of research or more -- significantly better than consumers nationwide. Only one-quarter (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," said Eric Hoffman of AWARE. "As in so many aspects of their lives, our military is setting a good example that other Americans would be wise to follow."
Preparing for this large purchase is particularly important for service men and women, given that nearly half (48 percent) of active and recently retired military personnel intend to purchase a vehicle in the next three years. Additionally, 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 only 29 percent of the general population).
Similar to Americans overall, most (63 percent) in or recently retired from the military anticipate financing a future vehicle purchase.
Overall, military servicemembers have a higher level of comfort than consumers nationwide when it comes to vehicle financing. Three-quarters (75 percent) of those in or recently retired from the military or reserves feel informed about vehicle financing, compared to 58 percent of consumers overall. And there is intensity to that feeling, with 52 percent of military respondents feeling "very informed" (compared to 36 percent overall).
They also tend to have a better grasp and more of a basic understanding of the auto financing process. For example, 93 percent of military respondents understand that one's credit history impacts the annual percentage rate and overall financing package offered to the consumer. In contrast, more than one in five (22 percent) of Americans in general did not know this fact.
"We applaud the massive financial literacy effort being undertaken by all the branches of the military, and by the Department of Defense through its Financial Readiness Campaign," said Hoffman. "Clearly there are signs that this is reaping positive results. Others looking to enhance basic financial literacy among its constituents should take its cues from these successful programs."
Interestingly, although those currently in and recently retired from the military or reserves ranked as the savviest consumers AWARE surveyed, they want the auto financing industry to offer even more information. Seven in 10 (70 percent) are interested in having more information from the vehicle financing industry, with one-third being very interested (33 percent).
AWARE was formed by the vehicle financing industry to build a greater understanding among consumers about how auto financing works. The group's primary initiative is its website, http://www.AutoFinancing101.org, which is available in both English and Spanish. The site aims to provide potential buyers of new and used autos with the tools and resources they need to successfully navigate the auto financing process. AWARE focuses exclusively on educating consumers on vehicle financing in a web environment and offers materials free of advertising or lead generation sales tactics.
KRC Research, on behalf of AWARE, fielded the random sample telephone survey of 3,806 American adults ages 18 and older, including an oversample of 200 current and recently retired military and reservists, on July 5-20, 2006. This report compares national results to the results from current and retired military and reservists. The margin of error for the total sample is +/- 1.6 percent at the 95 percent confidence level. For the military sample the margin of error is +/- 5.8 percent (1).
AWARE's membership includes the following:
American Financial Services Association National Automobile Dealers Association National Association of Minority Automobile Dealers American International Automobile Dealers Association American Honda Finance Corporation American Suzuki Financial Services AutoNation DaimlerChrysler Financial Services Americas Ford Motor Credit Company GMAC Group 1 Automotive, Inc. Jaguar Credit Land Rover Capital Group Lithia Motors Mazda American Credit National Auto Finance Company Nuvell Financial Services Saab Financial Services Corp. Sonic Automotive, Inc. Toyota Financial Services United Auto Group, Inc. Volvo Car Finance North America Wells Fargo Auto Finance