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Dealers target military personnel with booby-trapped auto loans

[Aug 15, 2011.]


Those who serve in our military willingly put themselves in harm's way, so it shouldn't be too much to hope that they won't be targeted when they return stateside. But no. At the start of this month, Statesman.com, a Texas-based website, blogged on the "legion" of car dealerships clustered around Fort Hood, some of which may aim to lure young servicemen and women into auto loans that are little more than scams. As the site put it:

...consumer advocates say that all too often soldiers around the country fall victim to predatory auto loans that take advantage of young servicemembers, many of whom are buying their first car and managing paychecks for the first time.

So it's unlikely that there's anything special about Fort Hood in this respect. In fact, things have gotten so bad that the Federal Trade Commission held hearings into bad auto loans and the military on August 2.

Auto loans that are booby-trapped

The Center for Public Integrity (CPI) is outraged by the shady practices of many dealers over auto loans for service personnel. Last month, it reported a number of horror stories of serving men and women who had been victims of this form of predatory lending, and made one claim that was particularly shocking:

When it comes to dealers that fly American flags and post signs that say "Welcome Military," consumer advocates often joke that "the bigger the flag, the worse their practices are," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a California-based advocacy group.

And it quoted senior officers who highlighted the real risks faced by servicemen and women in war zones who are distracted by financial worries at home.

Auto loans a risk for all

It's especially despicable that some dealerships target young people in the military. But some in the industry are equally ready to entrap civilians. Back in April, the CPI's website, iWatch, published yet more horror stories, but these concerned those who weren't serving in the military. One former dealership employee summed up the situation:

John Callahan said in his three years selling cars on dealer Web sites he was troubled by the sales techniques he saw taught. "They were teaching you how to steal money from the consumer and hide the fact."

Small wonder, then, that a 2008 Better Business Bureau/Gallup survey found that only 13 percent of Americans trusted car dealers. That made them the least trusted business of all.

Auto loans without the dealers

Civilians and service personnel alike need not trust dealers when it comes to auto loans. They can arrange finance before they ever set foot on a dealership lot. Banks, credit unions and online lenders are all good sources. Indeed, you can find quotes for auto loans on this site.


About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.

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