Tuesday, July 10, 2012

How Military Personnel Can Get Car Loans

One of the first decisions that most new young service members make after graduating military basic training is to go out and buy a new vehicle. For most of them, this is the first time in their lives that they've had a steady job with a guaranteed paycheck and benefits. Many of them have not had sufficient training on how to properly manage their money or how to write out an appropriate budget based on the amount of money they have coming in and going out each month.

Most car dealerships enjoy dealing with military service members because service members are typically reliable at paying their debts, especially recurring ones since almost all service members get paid via direct deposit on the first and fifteenth of every month.

The way that dealerships make a significant amount of money with some of these young men and women is by charging them higher than average interest rates. Many times, the dealership will say that the servicemember is a higher risk customer in order to justify this higher interest rate. Legally, the dealership could be accurate by saying this, since many of these young men and women have never applied for credit before, and typically have very little, to no credit history at all. This is what allows the dealerships to charge a higher interest rate, and be legally justified in doing so.

Many young men and women are not informed enough to be aware that they have the ability to negotiate the interest rate down to something that is more affordable and reasonable.

A good way to find out what an appropriate interest rate would be is to go to a few websites of well known financial institutions. A simple google search will turn up several reputable banks that offer automobile financing. Get an idea of what some of their average rates are. If you walk in to a car dealership and they are trying to charge you three to five times higher than the average rates you found online, then you should seriously consider either negotiating that rate lower, or maybe even attempt to get your financing through one of the more reputable financial institutions you found online. Another advisable option would be to go to another dealership and take your business elsewhere.

Many times, U S A A or other Service Based Financial Institutions such as Navy Fed or Marine Fed will offer extremely affordable interest rates to service members looking to buy new or used vehicles. Often times they will also have incentive programs and rebate offers available that far surpass what is offered to non-members or civilians. Dealerships also often offer at least $500 rebates to service members.

Purchasing a new vehicle and deciding on financing options are two very major decisions, and not ones that should be taken lightly. As with all significant decisions, it's important to do your research and ensure you are making an informed decision that will pay off for you in the long run.

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