Holidays are open season on military wallets
(cont'd)

These days at Camp Pendleton and the station, used-car dealerships are the No. 1 money pit for service members, Harvey said. In his assessment, high-interest credit cards and high-end electronics are also bigger problems than payday loans.

Harvey estimated that 450 Marines a year come to his legal-assistance office seeking relief from contracts riddled with high fees and interest rates.

"Marines walk into a place that advertises $99 down and you can leave with a car, but they don't consider the interest rate or the length of the loan, which can be 84 or 96 months," Harvey said. "There was a Marine who bought a 1995 Neon, and between the cost of the car and the interest rate, that car was going to cost $45,000."

The vehicle is worth $2,000 to $3,200, according to Web sites such as www.edmunds.com and www.consumerguide.com. Harvey said the Marine is bound to pay the $45,000 unless the used-car dealer decides to let him off the hook.

Some car dealerships also offer so-called yo-yo sales, said Harvey and Somerville, the naval station attorney.

It works like this: A customer goes to a dealership and finds a car he likes. The salesman quotes him a price based on a projected interest rate, which still needs to be finalized.

The customer trades in his car and drives off with the new vehicle, only to be told a few days or weeks later that he didn't qualify for the lower interest rate and must instead pay a much higher one unless he can arrange his own financing.

Such a practice is legal under California law.

"I always tell the Marines to shop around and then to get the offer on paper and bring it to a guy like me," Harvey said. "If the dealer won't put the offer in writing, that should be a red flag."

What galls Somerville is that often the same used-car dealerships taking advantage of service members are the ones hanging banners that proclaim they support the troops.

"We beg our folks to come see us before they sign a contract," Somerville said. "We can't legislate, all we can do is educate."

 

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