Auto Loan
Military Car Loans for Army Personnel
Unhappy with your current auto loan terms? Click here to refinance and drive home some savings!
Unhappy with your current auto loan terms? Click here to refinance and drive home some savings!
Key Takeaways
For a member of the armed services, a military car loan is a right way to go, as you can get this loan at a lower interest rate and a longer payback period. Traditional means of building credit, such as applying for and using gas cards, department store credit cards, etc., are often unavailable to persons serving in the military who are stationed overseas for extended periods. This is why there are options for people in the military to buy the car they need, regardless of their credit history, including low-interest car loans and even bad credit auto loans.
Auto loans offered by military credit unions are a good option for vehicle financing. These credit unions were created to meet the service members' needs, and since they have a better understanding of military life, they will make the borrowing process easy.
Here are the two military credit union options.
USAA offers auto loans exclusively to servicemembers, veterans, spouses, and qualifying relatives. It provides borrowers up to 45 days to shop after receiving a loan offer, which can help with dealership negotiations. However, there’s no prequalification process, so applying results in a hard credit pull. Loan amounts start at $5,000, with rates beginning at 4.94% APR (with autopay), covering new, used, older vehicles, and refinancing options.
This credit union, insured by the National Credit Union Administration, offers new and used car loans. Only military personnel, their families, and household members can receive membership in these credit unions. You can refinance your current auto loan with the help of these credit unions. They offer low annual percentage rates, lower monthly payments, and longer loan terms with a low-down payment.
You can choose Pentagon Federal Credit Union if you search for a credit union with a membership pool comprising civilians from certain organizations. They offer low APR, which can help you save more money. But to be a credit union member, you should have a high credit score.
Following are the manufacturers who are ready to offer discounts to military members when buying new cars.
You can save $500 on the purchase or lease of select new Honda automobiles.
Volvo has a fantastic deal for those who are serving their country overseas. You can avoid losing thousands of dollars and gain valuable benefits. It offers a service whereby you can keep your Volvo for up to five years in Europe and then send it to a Volvo dealership in the United States for free. The four-year/50,000-mile guarantee applies anywhere in the world. This is viable if you plan to import your vehicle to the United States when your tour concludes.
Certain Chevrolet, Buick, and GMC models come with a $500 cash allowance from GM, while select Cadillac models come with a $1,000 cash allowance. You'll need to sign up, give some basic contact details, and take retail delivery before a certain date if you want to get the discount.
If you're a military member or a veteran, you can save up to $500 on select Dodge vehicles and get a cash incentive. This applies equally to buying as it does to leasing.
Military car loans are better than conventional car loans due to various benefits. Here are the various benefits.
In most cases, a service member's credit score does not have to be above the standard minimum to qualify for a military auto loan. In most cases, the approval procedure is faster than normal.
A reduction of 0.25 percent to 0.50 percent off the lender's ordinary interest rate is offered for military auto loans. You may save much money on interest payments with a lower rate throughout the loan term.
A prepayment penalty is charged for regular car loans, but once your military loans are paid off early, this penalty won't be charged.
You need not make a huge down payment for military loans, which can help you save more money.
The repayment period of military auto loans is longer than that for regular auto loans.
Installment contracts, such as auto loans, are afforded special protections for active-duty service members by the Servicemembers Civil Relief Act (SCRA). These safeguards include a prohibition on repossession of a vehicle for violation of a contract without a court order. Auto loans opened before a service member enlisted are also subject to the SCRA's interest rate caps.
The major drawbacks of taking military loans are:
If you miss out on any of the payments, it can hurt your credit score, making it complicated to borrow money in the future.
Military auto loans can be obtained from any financial institution, including banks, finance companies, and military credit union associations. However, eligibility for these loans could be based on a person's length of service or the type of function they do.
Military loans will be less costly if you are military personnel as the interest rates will be lower, but there are many additional costs involved. These costs include maintenance costs, fuel, parking fees, and insurance. These additional costs will not always be low.
To get a military loan, you should meet the following qualification requirements.
It's not hard to look for and find low-interest auto loans; nevertheless, you should know a few things before signing any paperwork. Most lenders who work with service members have excellent intentions and want to help those who have served their country. Here are some points you have to take note of before taking military loans.
The military faces a challenge wherein, most leasing agreements prohibit the usage of leased vehicles outside of the state or country. Because frequent relocations and deployments make it impossible to remain in a single location, you must obtain written confirmation from the dealer that you are permitted to take the leased car outside the state or to a foreign base. If not, don't commit; there are plenty of other options.
Contrary to what you would expect or the dealer might tell you, the final monthly payment is not the most crucial aspect of the negotiation process. The asking price is what you should be concerned with. By negotiating a smaller monthly payment, you may have to pay more interest over a longer period, but you may be led to believe that you are saving money. The monthly payment can be taken care of by negotiating the item's price.
You should shop during the last two weeks of December, right before the Christmas rush, when retailers are eager to clear out their stock, or during the late summer and early fall, when manufacturers are switching out models and offering discounts to encourage sales. Also, be on the lookout for easing market conditions that could bring about price drops.
Whether you're buying a new or used automobile, the dealer will try to upsell you on an extended warranty. You can save as much as 40% off the dealer price by purchasing a warranty from a third-party distributor instead. But make sure that the third party has insurance to cover your warranty in case they go out of business.
Before you plan to go out and buy a new automobile, think about trying to sell the one you're trading in on your own. A dealer's primary goal is to make a profit; therefore, they'll try to negotiate a price well below the market value. Don't fall for it. You can choose to sell your car privately for what it's worth.
Military personnel, their families, and household members can easily receive military loans and thus enjoy the added benefits. The various benefits include a lower down payment, lower interest rate, and longer repayment period. To get the best deals, shop around for auto loans when you want them. Ensure that you don't miss out on any payment so your credit score won't be adversely affected.
The interest rate of military loans offered by Navy Federal Credit Union is 7.74% to 18.25%, and that by USAA is 8.5% to 18.77%. PenFed offers 9.49% to 18.49%. The rates offered by different financial institutions vary.
In order to get qualified for military loans, the following are considered:
Don't let your monthly car payment exceed 20% of your monthly take-home pay. Everything from the monthly payment to gas to maintenance is included in this total.
If you enlist in the military and serve for three or six years, you may be eligible for a debt repayment benefit of up to $65,000. Both federal and private student debts have the potential to be discharged under certain circumstances.