Military Auto Loans Tips

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Where can I find a car to buy?

Finding a Car

Military folks are constantly on the move, going from one installation to another. Consequently, cars are often bought and sold at a rapid clip among the personnel on the installation. If you are looking to purchase a used car, you should know that your options are not limited to rummaging through the offerings of local car dealerships. Most military installations have spaces reserved for personnel to use to showcase their cars for sale. These areas are affectionately dubbed the Lemon Lots because they are chock full of cars which people need to sell in a hurry due to a PCS or impending deployment. Oftentimes, you can find a real deal if you periodically check the Lemon Lot, especially if someone is in a real hurry to sell the car. If you cannot find a suitable car at the Lemon Lot you should check the BX/PX/NEX, because most of them feature community boards which people can use to post advertisements for cars they are trying to sell. Don't discount the official newspaper of your military installation either, because some people will list their cars for sale in the paper and not feature them anywhere else. Once you find the car you would like to buy, be sure to have it checked out by a mechanic prior to making the purchase.

How can I obtain inexpensive insurance for my new car?

Save More Money

You may already know that you can ask for (and usually receive) a military discount when you buy a car, but you should keep in mind the other ways that you can save money on your expenses. For instance, you can save quite a bit of money on the car insurance you obtain for your new car because of your active duty status. There are auto insurance companies who cater only to military personnel, and these companies usually offer fantastic rates on their insurance. Other insurance companies offer auto insurance to everyone, but give special rates to military personnel. The best idea is to shop around for insurance before even buying the car. When you call around to compare rates, be sure to mention to the companies that you are an active duty military member, and ask about what types of discounts they offer to military folks. When you find the best deal, take their phone number to the dealership when you go to purchase your car, and call them while you are in the middle of signing all the paperwork. Most companies will fax a copy of proof of insurance right over to the dealership, so you can drive off the lot fully insured by a company that offers great rates.

Should I get an auto loan from a local military lender?

Military Lenders

Most military installations have one or two lending companies right outside their gates. Some of these lenders are completely legitimate and issue loans to military personnel at reasonable rates. Other lenders, however, attempt to prey on military members by posing as lenders who truly care about the nation's military folks, yet offer ridiculously high interest rates and tack on unnecessary insurance coverage to loans. Most of these loan companies will have prominent military-type propaganda in the window and may exclusively write loans for military personnel. This does not make them friends of the military, however. If you are in need of an auto loan, it is best to steer clear of loan companies that make their money by preying on inexperienced military borrowers. You will know this is the case if the interest rate they offer is twice as high as other lenders, and if things like disability insurance and life insurance are automatically tacked onto loan documents. Disability insurance and life insurance are legitimate offerings for auto loans, but the customer should always have the final say as to whether this coverage should be added to the loan. You will be far better off going with a reputable auto lender instead of one of these lenders.

How can I get ready to purchase a car?

Family Support Center Budget Help

If you have plans in the near future to purchase a car, but you aren't entirely sure if you are financially ready, you should know that most military installations have financial counselors who are available free of charge through the Family Support Center. The financial counselor will sit down with you and take a thorough look at your current financial situation. You can find out if you are truly in the position to easily afford to purchase a car, and how much of a loan payment you can manage each month. The financial counselor may also be able to estimate your future car insurance payments in addition to a good amount to put into a monthly car maintenance fund. If you are not currently in a position to be able to afford a monthly payment, the financial counselor should be able to show you the steps you should take in order to get ready to purchase a car. He or she may suggest minimizing other expenses, or paying off certain accounts prior to taking on another financial obligation like a car payment. Since this service is offered to military members free of charge, there is no reason why you shouldn't look into it before purchasing a car.

What dealerships should I stay away from when purchasing a car?

Blacklisted Dealerships

You may not know this, but your military installation keeps a list of local establishments which military members are supposed to stay away from. This list includes car dealerships which have repeatedly sold jalopies while also offering sub-prime auto loans with ridiculously high interest rates. Essentially, these car dealerships try to take advantage of military folks who are either inexperienced with the process of buying a car, or military personnel who have a few credit problems and feel as though they don't deserve a better loan. Before you go shopping for a car you should check with the Public Affairs office on your military installation, or instead check with your supervisor to find out which car dealerships you should stay away from. You should also ask around to see how other military members were treated at the local car dealerships near the base or post. Maybe someone you know had a great experience with a local dealership and received a generous military discount when purchasing their car, so you should head to the same dealership your friend used and take a look around.

Do car dealerships ever give military discounts?

Buying a Car

One of the first things active duty military members should do when walking on to a car lot is to tell the salesperson, "I'm in the military. What sort of military discount do you offer buyers?"

Many car dealerships, especially dealerships which are located near a military installation, offer generous discounts to military personnel. In some instances, the dealership may not necessarily have a policy of extending discounts to military personnel, but if you ask, they may knock a nice bit of money off the purchase price of a car. Whether you secure the financing through the dealership, or if you already have your financing in place from a lender, saving $500 or $1,000 simply for being in the military is great. You should never feel apprehensive about asking for a military discount, especially with big-ticket items, like cars. After all, if a company wants to grant you a nice discount as thanks for your serving the country, you certainly deserve it. Just be sure to have a copy of your military identification card with you, in case the dealership wants proof of your current service. Also, be sure that you are still paying a fair price for the vehicle you purchase; if a car is priced $2,000 over what you should be paying and the dealership gives you a $1,000 military discount, you are still paying $1,000 too much.

Is it hard for military members to get approved for auto loans?

Military Auto Loans

Military members are in a unique position when it comes to any type of debt. Creditors know that if a military member does not pay his or her bills, there is always a First Sergeant or other supervisor who can be contacted and informed that the military member is not making payments. Shirking one's bills is highly discouraged in the military, and consequently creditors know that military members make a good credit risk. For this reason, if you are in the military you may find that you are able to acquire auto loan financing easier than if you had a comparable civilian job. Be sure that you take a good look at your own financial situation before accepting an auto loan. For example, although you may be approved for $30,000, you may find that upon examining your monthly financial obligations you don't think you can afford the payment on an auto loan beyond $22,000. Remember, when creditors look at your credit report before approving you for an auto loan, they don't see your monthly utility payments and any payments you may be making to individuals. This means they don't know if you pay for three cell phones and are paying $100 a month to your parents. Before accepting any offer for a military auto loan, be sure you know how much you can actually afford.

Is it okay to ship a car overseas if you still owe money on it?

Overseas Move

If you have just received orders to head overseas for a couple of years, you might be in a position where you need to consolidate your family cars from two to one. Some military members do this by trading in their two cars and purchasing one car in their place. If you do this, however, you need to make sure that your lender knows that you will be heading overseas with the car. Some lenders simply do not like the idea of the cars which are not fully paid for going overseas. After all, if the auto loan becomes delinquent, imagine how much more difficult a repossession attempt would become! Although most lenders are quite understanding of the potential for military members to move overseas, some lenders do have regulations which prohibit the shipping of a vehicle overseas which still has a remaining balance on the loan. It is better to find this out before ever securing the auto loan with a lender, instead of discovering it when you are at the port attempting to ship your car to your new military installation overseas.

What do I do if I feel as though I was ripped off by the car dealer?

Bad Loan?

Buying a car can be an easy process, but if this is your first time doing it and you are relatively new to financial independence, mistakes can be made. Military car loans can be especially subject to confusion when the military member is making his or her first major purchase and is doing it without any assistance or advice from parents or friends. If you find that you have been talked into purchasing a car which is not necessarily a good buy, or if you have signed a contract for financing which does not seem fair once you get home and look everything over, you may not be stuck. If you are a true victim of shady business dealings, you may be able to contact your First Sergeant, supervisor, or legal office and have the contract voided. Most dealerships offer a period of time in which the customer can return a newly-bought car, but smaller dealerships – in particular, those that prey on young military members – may have no such guarantee. If the dealership is contacted by a representative on the military installation, however, and is told to either rescind the contract or be blacklisted by the installation, in most cases the dealership will choose to rescind the contract instead of losing all the business from the installation. This type of action is for instances when a military member has truly been bilked, and is not for instances when the buyer simply decides he or she doesn't want to car after all. When you head out to get another car, do so with financing already secured from a reputable lender beforehand.

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