Buying a car is a major purchase for anyone, but active duty military members and veterans have even more to consider thanks to the many discounts and perks of service. As a current or former member of the military you have access to multiple programs not offered to civilians.
What’s the best way to take advantage of those benefits and choose the auto loan that’s best for you? Here are five things to keep in mind.
What Kind of Loan do you Need?
If you’re like most car buyers, you’re going to get a loan to finance your new or used ride. Pay close attention to interest rates and shop around before signing on the dotted line.
While wandering onto a car lot and driving off in your new vehicle may be an exciting thought, the reality is there is a lot of negotiation and red tape between seeing the car of your dreams and having the keys in hand. Your best bet is to get pre-approved for a new or used car loan.
Ask About Discounts, Special Pricing
Listen, everyone benefits by saving money and many auto dealers and financial lenders offer special rates and incentives only for military members and veterans. Do your homework to find out what incentives are available to you. From cash back or reduced pricing to military and veteran-only rates for financing, you could save hundreds, if not thousands, of dollars on your vehicle purchase. If you have some flexibility you may want to wait for military specific holidays during which the discounts can be even higher.
Bottom line? If you don’t ask, you may be paying more than you need to for your new vehicle.
Think About Your Next Move
One thing you can count on in the military is that, at some point, you’re going to move. Think about where you might be headed next when you are buying your car. Are you likely to go OCONUS? If so you’ll want to decide if you’re taking your new car with you or putting it in storage. If you are headed to a busy metro area, will you be able to get around easily if you have an extra-large pickup or SUV? Cars cost money, and you’ll be paying down the loan for a while, so buy the car that will work with your military service. It might also make sense to look at vehicles that have a high resale value in case you need to sell it quickly when Uncle Sam decides to send you somewhere you won’t need a car. And if you are a veteran or in the process of leaving the service, now may be the time to celebrate your next chapter in life and buy the car you’ve had your eye on.
In short, take a look at where you are and where you may end up, and buy accordingly.
How Much Car Can You Afford?
The biggest problem with buying car is that we fall in love with our eyes, not our bank accounts. Knowing how much you can afford to borrow is not only crucial to getting the right car, but, more importantly, to getting the monthly payment your military pay can support.
It’s easy to assume you’re going to get promoted when you think you will and count on that money, but military service — and your pay — can change quickly with new duty assignments, change in location BAH, or even a change in special pay allotments.
When financing a car, it’s important to use a payment calculator/estimator to find out what your monthly payment will be and figure in the cost of living at a potential future duty station. That goes for veterans, too, who may be launching their civilian careers and dealing with a new pay structure or instability working in the private sector. Planning ahead and crunching the numbers is always a good idea.
Finally, keep in mind that auto loans are not a once in a lifetime occurrence. You could find yourself financing another car for your teenager or adding another vehicle to support a spouse’s commute needs.
Whatever your situation and whatever your stage of military service or veteran status, there are tools and resources to help you make the best decision when financing your new car.