Buying a car is not a decision to take lightly. There are many factors to consider, including financing, vehicle choices, and dealerships. If you are a member of the military, the decision-making process can be even more difficult because of the amount of scams that have been on rise by dealers looking to take advantage of those serving our country.
Why Does This Happen?
The main reason military personnel are susceptible to car-buying scams is because many soldiers are young and fresh out of high school. Many lack the real-life experiences with finances and out on their own for the first time without mom and dad assisting them with choices. Additionally, young military members with new families are often struggling to make ends meet while diving into new careers. Certain dealers know this and offer programs geared toward military members. These programs sound patriotic but oftentimes end up costing members more money than they can reasonably afford to pay on a new salary.
While not all car dealers are on the shady side, and many genuinely offer programs to help military members get discounts and other benefits when buying a care, here are some things to consider when buying a vehicle:
Leases Are Not the Best Option for the Military
For military members getting deployed elsewhere, a lease is not the best option. The majority of lease conditions state that registering a vehicle out of state or overseas is forbidden. For members being stationed elsewhere, it is possible to get out of the lease, but not without wading through some red tape and, potentially, the loss of your vehicle. Car dealers can be misleading about the terms of a lease, so read the fine print if you are considering a lease, and be sure to confirm in writing that taking a leased vehicle out of state is allowed should you get transferred during the term of the lease.
Look Past Monthly Payments
While it is reasonable to think about monthly payment affordability, it is also important that you not use it as the focus point of the price negotiations. You want to negotiate the sales price based on the value of the vehicle. By negotiating based only on monthly payments, you are not fully aware of the price of the car or the interest rate they have you paying. Dealer financing will use a person's payment focus to make thousands of dollars on a sale. They will specifically ask what you are looking to pay monthly. It's in your best interest to let them know right upfront you are not concerned with payment amount and are only looking for a fair sales price. If you can negotiate the right price at the right APR, the monthly payment will be something you can afford.
Don't Wait Till the Last Minute
If you have a car on its last wheels, you've waited too long to buy a new one. Rushing to get something because you need it leads to mistakes. You need time to compare lenders, secure a loan, and compare vehicle models and dealer pricing. Don't wait until you are out of time, or you'll end up paying too much for a rushed decision. You should aim to get a new vehicle before during the Christmas holiday season, when most people are looking for gifts and not cars. Dealerships are trying to close their books for the year and are more willing to make a better deal. You may also consider buying during August throughout November when new inventory is arriving and dealers are more apt to offer incentives.
Some Helpful Resources
One military veteran got fed up with soldiers being taken advantage of, so he created a site dedicated to weeding out shady car dealers. Chris Walsh, an Air Force veteran, who also spent 25 years in the auto sales industry, created the site Vets-Cars.com. His mission for the site was to create a company that enlists dealerships nationwide to commit to treating current and former members of the military and their families with care and respect. Other well-known sites like Consumer Reports also do a good job of educating soldiers of potential scams with its Car Blog. Just remember to tread cautiously and if sounds to good to be true, most likely, it is.
Jeff Rose is an Iraqi combat veteran and Certified Financial Planner Professional who runs the well known financial planning blog Good Financial Cents. He is also working on his first book by combining the discipline of his Army training with the rigors of his financial planning experience to help people take control of their life and money. You can read more about it at Soldier of Finance.
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