Buying a car: A lesson in auto finance for the troops

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Buying a car: A lesson in auto finance for the troops
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It’s not unusual for service members to build up a lot of savings thanks to tax-free combat pay. Couple that with the fact that many of our brave men and women in the military are young and single —which means they have some disposable income to throw around—and it could all lead to an auto-buying disaster. 

But if you just heed these few basic rules before buying a vehicle, you’ll be a lot better off and your wallet will thank you!

Buy used instead of new

Unless you plan to buy a new car and hold it for 10 years or longer, buying a used car and holding it a minimum of two to three years is the way to go. Just be sure to have your potential buy carefully checked out by a diagnostic mechanic you trust before someone else’s problem vehicle becomes yours.

Don’t use a “buy here, pay here” lot

“Drive out in a new car TODAY! No credit, no problem!” We’ve all heard the pitches. What seems like a solution to your need for wheels is actually a big problem. The financing you get as a sub-prime borrower usually comes with extremely high interest rates. 

Get your financing in place

Pre-qualify for financing at a credit union, online lender or traditional bank before you set foot on a dealer lot. Only use the dealer for financing if they will give you the lowest rate. 

Shop around for the car before you get to the dealership

Get a guaranteed price for a vehicle online at a website like TrueCar.com or any of its competitors and you’ll never have to go into a dealership other than to take delivery of the vehicle!

Before you do any of this, take a step back and think!

Consider how much you truly want to spend on the car, not just what the monthly payment will be. Too many Americans are ‘all flash, no cash’ and drive their money down the drain. Cars lose value over time, so they are never an ‘investment.’ Think of what you can do saving for your future instead with a little extra money in your pocket. 


Other factors to consider

Should you buy an extended warranty?

Clark’s longstanding advice has been this: If you can afford the potential cost of a car repair, you should never buy an extended warranty. But if you’re unable to budget and save for repairs, then you may want to consider buying the manufacturer’s own warranty. Never buy from a third party! If trouble happens, the manufacturer is probably going to be there to stand behind its warranty. A third-party company will not.

But if you stick to Consumer Reports’ annual recommended list of vehicles, you shouldn’t have to buy an extended warranty at all — even if you have budgeting difficulties. The odds are such that their recommended vehicles won’t have severe problems over time.

Beware of flood cars

Here are four steps to take when trying to spot a flood vehicle:

Do a visual inspection: Check for water stains, mildew, sand or silt everywhere. That includes under the carpet, floor mats and dashboard, plus in the wheel well where the spare tire goes. Fogging in the headlights and taillights can also be a clue.

Give it the smell check: Does the inside of the car smell like a hospital? A heavy smell of disinfectant or other cleaners means someone is trying to conceal a mold or odor problem.

Vet the records carefully: Run the vehicle identification number (VIN) and check for any title problems, liens, odometer rollback, salvage history and more at a site like CarFax.com. To be doubly sure, you should also run the VIN through a free database operated at NICB.org (National Insurance Crime Bureau).

Beware of VIN forgery

The database maintained by the NICB also lets you check out a VIN to see if it’s from a vehicle that’s been reported stolen or that’s a salvage vehicle. This should be a first line of defense to protect yourself against VIN forgery crimes.

But additional precautions are needed as well. Here are some tips from Sgt. Marty Bolger of the Regional Auto Theft Task Force in San Diego County.

1) If the price is too good to be true, then it probably is! Check the Kelley Blue Book value. If it’s priced radically below that value, your safest best is to find another vehicle to buy.

2) Check the vehicle history report for any irregularities. Out-of-state cars can be real red flags.

3) When buying from an individual, request that the sale be done in the parking lot of a police precinct. This tactic will scare away any criminals.

4) Document the transaction by getting receipts and taking pictures of the person selling the vehicle and the license plate of the car they’re driving. If the seller is hesitant, you should be suspicious.

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