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Rosemary Shahan, president of Consumers for Auto Reliability and Safety, has a long list of “unconscionable practices” she says unethical dealers use on military buyers. They include: falsifying loan applications, bait-and-switch financing and selling a car they know has been in a wreck without telling the customer.

“Auto sales and financing scams are leading causes of financial readiness problems for military service members and their families,” she says.

Two years ago, while Congress was debating the Dodd-Frank bill on financial reform, Air Force Secretary Michael Donley wrote a letter to lawmakers. It said:

“I'm sure you agree that Airmen who are distracted by financial issues at home decreases readiness. Protection from unprincipled automobile lending enables our Airmen to concentrate on their primary mission -- fly, fight and win in air, space and cyberspace." (See full letter)

In a similar letter, John McHugh, Secretary of the Army wrote:

"Over the years, many of our Soldiers have fallen victim to predatory lending practices and have entered into contracts for prohibitively expensive financial products promoted by some unscrupulous car dealerships and lenders. Though the Army does educate our Soldiers about buying cars in our normal financial education curriculum, the fact remains that junior enlisted Soldiers … remain an easy target for dishonest brokers.” (See full letter)

McHugh’s letter listed the results of an informal Department of Defense survey of officers who do financial counseling for the four main branches of the armed forces. The vast majority (79 percent) reported they were seeing military members with auto financing problems. Many of these clients, they reported, worried they could not make their car payments.

The National Independent Automobile Dealers Association(NAIDA) does not shy away from the problem.

“Try as we may to get rid of them, there are still bad actors in our industry,” says Steven Jordan, NIADA’s chief operating officer. “We are aware of the growing issue regarding vehicle purchases and financing by military personnel and we feel there is no place in our industry for those who wish to take advantage of or deceive our military personnel with improper disclosure or unfair & deceptive trade practices.”

Protect yourself
There are things everyone – military and civilian – should do when buying a vehicle.

  • Do your homework. Check out the dealership. Talk with friends and go to the Better Business Bureau website. Learn the actual market price of any vehicles you are interested in. It’s easy. Just go to Edmunds.com, Kelly Blue Book or TrueCar.
  • Never shop alone. You should always have someone there to watch your back. Remember, dealership salespeople do this every day for a living. No matter what they say, their job is to get the most money possible on every transaction.
  • Don’t let anyone pressure you into signing the sales contract. Once you sign it, the vehicle is yours and you are legally required to make the payments. There is no three-day “cooling-off period” for car sales.
  • Never buy a used car until you have it inspected by a qualified independent mechanic. They can spot damage from a previous wreck or potential mechanical problems. The small price you pay for this inspection (normally $100 to $150) could save you literally thousands of dollars down the road.
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