Companies, such as dealerships or other lenders, may offer military rates or discounts to bring you into the showroom, but that doesn’t mean the financing offer is the best one you can get. We’ve also heard that some companies may inaccurately promise benefits under the Service members Civil Relief Act (SCRA) to military customers. If you move and need a vehicle right away, your circumstances may mean that you make a rushed decision and not shop around for the best financing.
- Reductions of interest rate under the Service members Civil Relief Act. We’ve heard from service members who were led to believe it was okay to sign for a loan with a high interest rate since they were active-duty and therefore, the SCRA would drop the interest rate to 6 percent. Unfortunately, that is not true. If you take out a loan to buy a vehicle after going on active duty, the SCRA interest rate cap will not apply – that cap is only for pre-service loans. You can find out more about your rights under the SCRA here.
- Permission from your lender to take your vehicle overseas. If you think you might be assigned overseas, make sure before you sign the auto loan contract that your lender will allow your vehicle to be taken out of the country – many won’t. If your lender has that restriction and will not waive it, then you should reconsider borrowing from them. Shipping companies usually require your lender to write a letter of approval before they will accept your car for overseas shipment. Don’t be left with a big problem at the last minute because the fine print of your loan contract says you can’t take the vehicle with you.
- Special military interest rates or discounts. If you’re offered a rate or promotion based on being a member of the military and you decide it’s the best financing for you, make sure you receive that rate in the final paperwork. You shouldn’t agree to anything at signing that you didn’t agree to beforehand. If the company tries to change the loan terms at the last minute, you can refuse to sign the paperwork and continue to shop around for the best auto loan for you. Remember, interest rates and terms are negotiable until the contract is signed.
If you’re struggling with a high interest auto loan payment, you may be able to refinance your loan for a lower rate by contacting your loan servicer. If your current loan servicer can’t help you – shop around! Always remember to stay focused on the total cost when shopping. Lower monthly payments for a longer period can cost you thousands of dollars in interest.