SCOTT AIR FORCE BASE, Ill. -- As a member of the military, you have a wealth of resources at your fingertips to assist with buying your first car. Take advantage of them.
The first thing to keep in mind is perhaps the most important: Do not buy that car based on emotion. You will overpay and quickly become disappointed. Take your time and do research about the car, price, and repair experiences of other drivers. Edmunds.com and Kelly Blue Book are both good places to start. These sites offer pricing tools, comparison tools, and information on maintenance costs over the life of the vehicle.
USAA also offers a car buying tool, which includes price comparison and getting pre-approved for a loan. This will help you know what you can afford, and often allows for greater negotiation of your interest rate at the dealership. The last time I bought a car, I was pre-approved for a 2 percent loan from USAA. The price on the car was firm, but I could negotiate on the dealer loan options. I was able to secure a 1.5 percent loan and saved a bunch on the monthly payments.
With that, ensure you do not buy too much car. Many first time buyers, and first term Airmen, buy too much car and overpay for what they get. Know what you can afford monthly, but do not disclose this to the dealer.
They can find ways to meet this monthly budget by extending the loan terms. If you do math ahead of time, you can avoid this mistake. Also, be aware that your financial standing will change. While you live in the dorms, you may have no other bills and a $700 per month car payment is achievable. However, when you move out and have rent, utilities, etc., the car payment is often way too much. Think smaller and used.
Edmunds.com, KBB.com, and the internet will help determine a fair price. On new cars, Edmunds and KBB will be your best resource. On used cars, always ask for the internet price. The price posted online will always be the best price the dealer can do and could beat the sticker price by several thousand dollars.
My last car was listed online for $12,000, but the sticker on the lot advertised $19,000. Without this information, I could not have negotiated the price down by $5,000 from the sticker.
Another important tip is to get everything promised in writing. If they promise a warranty, even for 30 days, ensure you have this in writing. It is much harder to enforce any issues without proof. Ask for the Carfax report. Dealers have access to this information, which shows prior repairs, accidents and even flooding.
After Hurricane Katrina, many cars were cleaned and transported north for sale. Too many buyers found out too late that the car was not insurable due to flooding from the hurricane.
Although this may seem odd, help yourself early by opening a credit card. You must be careful not to max out the card, and to either not use the card at all or to charge small amounts that you are able to pay in full by the due date. Many young airmen have no credit history which affects the interest rate offered. By opening a line of credit and not using it or using it to a limited extent, you are demonstrating great maturity with credit, which in turn shows the bank they can trust you with a loan, thereby lowering your rate.
Once you have found the right car, and made the purchase, you need to register the car. This step, done correctly, could save you hundreds of dollars. You can register the car in the state you are stationed, or in the state you are a legal resident of. Do some research and find out which state charges the least for sales tax, property tax, and renewals. Some states waive these fees for military members. Again, find the state which offers the best deal for you.
Finally, if you have any questions, feel free to stop by the legal office or perhaps consider taking someone you trust with you. A second set of eyes and ears helps you to avoid the emotional traps of buying a car. (No federal endorsement intended.)