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.