The Absolute Guide to Auto Loans for Veterans

22 Oct The Absolute Guide to Auto Loans for Veterans

The purchase of a new automobile can be exciting and thrilling, whether you’re buying one for yourself or someone you love. But, the process of getting approved for auto loans for veterans can be tricky. Don’t worry, though. There are many options for obtaining an auto loan even if you have bad credit or no credit.

In this article, you’ll learn everything you need to know about buying a car as a veteran, including the types of auto loans, where to get one, what you need to get approved, and what type of car to buy. Let’s dive in!

Can You Use a VA Loan for a Car?

The U.S. Department of Veterans Affairs (VA) does not directly offer auto loans. However, through the automobile allowance and adaptive equipment benefit, the VA can assist veterans and active duty military with purchasing a vehicle.

Where to Get a Car Loan for Veterans

As mentioned above, you cannot get an auto loan directly through the VA like you can with VA home loans. If, however, you are unable to drive due to a disability sustained while on active duty, you may qualify for an auto benefit.

This is known as the automobile allowance and adaptive equipment benefit in the United States, which provides a one-time payment of up to $21,488 to veterans with qualifying injuries.

Since you can’t get an auto loan from the VA, we’ve compiled a list of options below for where you can start your search.

Dealer Financing

Transitioning from active duty to civilian life can be difficult. A new lifestyle is not the only challenge, as you may also face new financial problems.

If you are a veteran and think about buying a car or need special equipment, you have options. These may include obtaining VA assistance, comparing military-specific pricing from car manufacturers, and securing financing from credit unions specializing in serving military personnel.

Generally, dealers take your credit history into account when determining whether you are eligible for a loan or not. If you are having trouble getting a loan, you may need to improve your credit health first.

Credit Unions Auto Loans With Discounts or Special Rates for Veterans

Overall, credit union auto loans for veterans may be more affordable for you if a VA benefit isn’t available elsewhere. Instead of making a profit, credit unions focus on serving their members.

A credit union may save you money if you meet the requirements. Traditional lenders may not have the best options for military personnel, so consult a credit union that caters to them specifically.

If you plan to use a credit union, you should research their offers since they may vary widely.

Here are some of the best auto loan companies to consider.

PenFed Credit Union

PennFed, or the Pentagon Federal Credit Union, serves military personnel and specific civilian associations. While you must make an initial deposit of $5 into a savings account to join, PenFed could provide you with attractive loan terms through its car-buying service.

Navy Federal Credit Union

If you are in the Army, Marine Corps, Navy, Air Force, Coast Guard, Air National Guard, or retired military, you may consider Navy Federal Credit Union for your auto loan. NFCU membership is also available to certain civilians, such as government employees.

It offers loans for new and used cars, motorcycles, and other vehicles, but it does not provide loans for used vehicles purchased from private sellers or lease buyouts.

As a member of NFCU, you may qualify for competitive auto loans if you are in the market for a new or used car. You may also be eligible for an additional 0.25% interest rate discount if you choose direct deposit for your monthly payments.

USAA

You may be eligible for USAA membership as a former military service member. The nearly century-old military credit union offers its members competitive rates on new and used cars.

USAA even provides the option to lock a rate for an auto loan if you apply and are approved. You can take up to 45 days to decide whether to proceed with the loan. Besides the auto loan options offered by military credit unions like USAA, veterans may also be eligible for additional manufacturer-based discounts.

Online Lenders and Banks

Military discounts and rebates may be available through some car dealerships and manufacturers. Here are a few options to consider when shopping for a new vehicle:

• Ford offers veterans a $500 cash bonus for qualifying purchases or leases of new Ford vehicles. This offer remains valid for only 24 months after you have completed your service, though.
• General Motors provides special discounts below the manufacturer’s suggested retail price to purchase or lease eligible vehicles, which could save you thousands of dollars. Create an account to confirm your eligibility and receive an authorization number.
• Acura offers veterans a $750 credit that can be applied toward select vehicles within two years of completing their active duty service.
• Jeep is offering veterans $500 in bonuses on select models if they purchase the vehicle within 12 months of their discharge.

This is only a selection of manufacturers that offer veteran discounts, so contact your preferred manufacturer about any further discounts.

Request a Discount

There may be a veteran discount in your dealership, even if it isn’t advertised. You should bring your military ID with you and ask what your options are. A car dealer may be willing to consider a discount for you.

Even a tiny APR allowance could result in significant savings. For example, if you borrow $20,000 for five years and the APR is 5%, you will end up paying $22,645.48 throughout the loan. However, if you borrow $20,000 at 3% APR over the same period, you will only pay $21,562.43. You can see that a slight reduction in the APR can have a significant impact on your wallet.  

The “Buy Here, Pay Here” Financing Model

What Is a BHPH Dealer?

Dealerships that finance auto loans on site are known as BHPH dealerships. Those with poor credit may find it difficult to secure a car loan so they look for opportunities at BHPH dealerships. Most of the time, these dealerships do not run a credit check, unlike subprime lenders.

Instead, they assess your ability to pay back the loan based on your income. As the dealers are also the lenders, everything from getting approved, selecting a vehicle, and completing the paperwork can all be done on-site. BHPH dealers are an excellent choice for buyers who need a car as soon as possible and cannot wait for the time needed to improve their credit score.

What Is the Procedure for Buy Here Pay Here Car Lots? 

Contrary to traditional dealers, BHPH dealerships finance their vehicles in-house. In other words, the purchase of a car and obtaining a loan are made under one roof. It is uncommon for BHPH dealers to be affiliated with banks, credit unions, or third-party lenders. To obtain financing, you must visit a BHPH dealer in person and cannot do so online.

In buy here pay here dealerships, the approval and loan amount are determined by available income. To select a vehicle, you need to sit down with their finance department member to submit an application and determine the terms of your loan.

After providing an interest rate and loan amount, you can choose a car from their inventory that meets your needs. Once you have selected your vehicle, you will sign the paperwork and be ready to drive away. The payments may need to be made in person at the dealership on a weekly or biweekly basis.

 

Types of Auto Loans for Veterans

Contrary to a regular auto loan, a military car loan is available only to active-duty military personnel and military retirees (20 years or more). But, how do they differ from others?

Typically there are lower interest rates for military car loans. If you take out a $15,000 loan to be repaid within four years at a 10% interest rate, you will end up paying roughly $380.44 per month, or $18,261.06 in total. At 7% interest, you would pay roughly $359.19 per month or $17,241.30 in total. A few percentage points can add up to big savings every month and over the life of the loan.

There are two types of loans: secured and unsecured. Knowing the differences between the two is essential so that you don’t impact your financial wellbeing. In general, secured loans require borrowers to provide collateral, while unsecured loans do not.

Interest rates, borrowing limits, and repayment terms are all affected by this distinction.

Secured vs. unsecured loans each have their pros and cons, which have been highlighted below.

Secured Auto Loans

A secured loan is backed by collateral, which can be used to purchase an item, such as a home or a vehicle. The lender will hold the deed or title for the home, auto, or home equity loan until the loan is fully paid. There may also be other collateral needed such as securities, bonds or personal property.

This is the most common way to borrow large sums of money because you offer security for the lender. A secured loan carries the risk that the lender will sell your collateral if you can’t pay it back.

Secured loans offer the following advantages:

• Rates are lower than in the past
• Borrowing limits are increasing
• Repayment terms are longer

Unsecured Auto Loans

Unsecured loans include examples like credit cards, student loans, and personal loans. Since there is no asset to recover in case of default, lenders are taking on greater risk, so interest rates are higher.

Getting secured credit may be an option if unsecured credit is denied, but it requires collateral. A borrower’s ability to repay the debt is measured by various factors, including the borrower’s financial situation and general economic indicators.

The five C’s of credit are used to judge your ability:

1. Character – includes factors such as credit score, employment history, and references
2. Capacity – current income and debt
3. Capital – money deposited in a savings or investment account
4. Collateral – personal assets offered as collateral, such as a house or car
5. Conditions – the loan terms

Pros

Military car loans require a lower down payment than regular auto loans, so you will pay less upfront. Buying a vehicle without much savings is possible, and if you have a less than average credit rating or limited credit history, obtaining a military auto loan may be more accessible.

Most loans can be applied for online and approved instantly. Also, military car loans have relatively more extended repayment periods, resulting in lower monthly payments. In addition, you may qualify for additional discounts and rebates.

Cons

• If you can afford to pay for your vehicle in total upfront without incurring financial hardship, the amount you will save on interest rates alone ($7,000-$8,000 from the example above) makes it worthwhile for you.
• Additionally, if you almost have enough but not quite, it might be worth it to save for a few more months.
• These auto loans are provided by private financial institutions, meaning you’re subject to the same rules and penalties as a civilian taking out a loan.
• A car loan can’t be discharged through bankruptcy, unlike an unsecured debt. Defaulting on your loan will severely damage your credit rating and ability to borrow in the future.

Tips for Getting a Military Car Loan

1. Select the vehicle you wish to purchase before applying for a loan. It will help you determine precisely how much of a loan you need.
2. Consider your options carefully. Do not apply for a loan from the first institution you come across. Shop around and compare rates and terms from a variety of lenders to ensure you get the best deal.
3. Make sure you have your military ID and proof of service ready. Your social security number and permanent address are also required.
4. Providing multiple addresses where you can be contacted is important to ensure that the lender you are taking out the loan from keeps in touch with you, regardless of where you are stationed (e.g., your family home, your military base).
5. Obtain a copy of your credit report that you can provide to the lending institution, if needed. Many lenders do this on your behalf.
6. If you cannot sign your loan documents in person, be sure to assign a power of attorney to someone who will be able to do so on your behalf. Notarization may be required in certain states.

What’s Needed for Loan Approval?

If you want an auto loan, don’t just wander into a car dealership. Being prepared and doing research ahead of time is key to obtaining a low-interest loan.

What Documents Are Required to Get a Car Loan

A new car loan application will require you to submit certain documents to prove your income and personal information, among other factors. Here are the documents you need to submit for a car loan.

1. Income Proof

Lenders typically require proof of income to ensure borrowers can make their car payments. To satisfy this requirement, provide a pay stub less than one-month-old showing your year-to-date income.

Tax returns and bank statements are required for self-employed people. Most lenders require two years of tax history, but they may ask for five. You will also need bank statements for the past three months.

2. Residence Proof

The lender must verify your address on the car loan application. There are several options available to you to prove that you live at the address you are currently using, such as a utility bill or any other correspondence you receive at your current address. A valid driver’s license is also required if you plan to drive away with a vehicle.

3. Insurance Proof

The law stipulates that all cars on the road must be insured, so your lender must verify that you have adequate coverage before approving your application. Find your insurance ID cards or insurance declaration pages and bring them with you to the dealership.

You may be able to secure insurance from the dealership if you do not have it currently, though. However, if you finance through a dealer, you won’t be able to shop around for the best rates. If you have a good relationship with your bank, you may find a better car loan rate with a preapproval car loan than through the dealership.

4. Identification

Proof of your identity is required to obtain a car loan. To start the application, you will need a photo ID with your signature, a current utility bill bearing the same address as your ID, and two months of bank statements. Passports, government-issued cards such as Medicare identification cards, stock certificates, and titles to homes or other vehicles are acceptable forms of identification as well.

5. Financial and Credit History

In addition to your current and past financial circumstances, lenders will consider your debt-to-income ratio (the percentage of your gross monthly income that goes towards paying your debts) as well as your credit rating and history.

With your basic personal information and consent, the lender can access this information without you having to bring anything. However, you should be aware that the lender will examine your current and past credit history.

6. Information About the Vehicle

When you apply for a used car loan, you will have to provide a lot of information about the vehicle you intend to purchase. The lender will want to see the vehicle’s purchase price, identification number, year, make, model, mileage, original title and any liens on the car.

A used car dealer is typically required by the “used car rule” to provide you with a comprehensive buyer’s guide for the vehicle that you are purchasing. It contains all the information you will need to apply for a car loan and information regarding your rights and responsibilities. Before signing on the dotted line, you should read the guide carefully and understand everything.

7. Documentation for Trade-ins

The lender will need the title and registration papers of the trade-in vehicle and any other documents that will help determine the trade-in vehicle’s value. To simplify the loan process, be sure to bring these items with you, as the car’s value will impact how much financing you receive.

A Guide to Getting Approved for a Car Loan

You will save boatloads of money throughout your life once you realize how car depreciation drains your wallet. One often hears that a car will lose 20% of its value in the first year. A $30,000 car loses $6,000 in a matter of minutes as you gleefully drive off. By the end of the first year, mileage and wear and tear could increase the price of the vehicle by 30%. You can’t ignore this. When you sell or trade your car, it takes effect much later.

Buying New vs. Used

Even though buying a new car sounds appealing, you should consider how much you could save over time by purchasing a used vehicle instead.

The average person owns 13 cars in their lifetime, each of which costs about $30,000, according to the National Automobile Dealers Association.

If you had purchased each of these vehicles three years old instead of brand new, you could save nearly $130,000 over your lifetime. A significant portion of the savings in purchasing a used vehicle can be attributed to depreciation.

Consider Vehicle Depreciation

Once you fully comprehend how car depreciation drains your wallet, you will learn to save boatloads of cash throughout your lifetime. You may have heard that a car will lose 20% of its value within the first year. Yes, a $30,000 car will lose $6,000 in a matter of months after you drive away.

Here is a comparison of two similar cars, one new and one used:

Depreciation of new cars: You acquire a vehicle for $30,000 and sell it three years later for $20,000. Amount: $15,000 Depreciation has cost you $15,000 on the car.

Depreciation of used cars: Now consider a 3-year-old vehicle you are considering buying, which may cost $15,000. Three years later, you could sell it for $10,000. So the used car depreciation costs you only $5,000.

Advantages of Buying a Used Car

Many people used to dismiss used cars by saying that they were simply a way of buying someone else’s problems. This is not true anymore. Below are a few advantages to buying used cars.

1. Today, cars are more reliable than ever before. There are some cars that can go over 100,000 miles without major repairs.
2. Cars require regular maintenance such as oil changes, tire rotations, and brake jobs. But with today’s cars, you can drive farther between scheduled maintenance appointments. In addition, tires and brake pads last longer than they did in the past.
3. When you purchase collision and comprehensive coverage, it is cheaper to insure a vehicle with a lower value. You can also drop comprehensive coverage, pay for car repairs, and save even more money.
4. The cost of registering a used car has declined each year.
5. By saving 30% or more on used cars, you could use the savings to purchase your dream vehicle in the future.

Advantages of Buying a New Car

1. New cars are assumed to be perfect, so evaluating the condition is unnecessary. There is no need to have it serviced right away. Additionally, it is easier to determine what you should pay for a new car, even though the negotiation process is still tedious.
2. Automakers offer numerous incentives to entice buyers, including cash rebates. Auto loan rates for new vehicles are typically lower, too. As a result, you’ll probably pay thousands less once you’ve negotiated a final price and taken into account the incentives.
3. New technology is introduced in new cars each year to improve comfort, performance, and safety. These features are not available in used vehicles unless you are able to install them.
4. A new car is likely to be more reliable than a pre-owned one, although pre-owned vehicles have become much more reliable over time. When a new car breaks down, you could have it repaired for free under the included factory warranty, at least for the first 36,000 miles or three years that most automakers provide.
5. You don’t hear many people brag about the used car they just purchased.

Auto Loan Calculator: How Much Can You Afford?

With an auto loan calculator, you can estimate your monthly car loan payment to see how much you can afford. If you don’t have a credit score, you can select your interest rate. Input the car price, down payment amount, and loan term to determine how variations will affect the following:

• The amount of your monthly car loan
• Taxes and fees
• Total amount of interest

Car Loan Calculator: How to Use It

Here is a guide to filling out the car loan payment calculator.

Price of Car

Enter the price you would like to pay for the vehicle in this field. To estimate the cost of a new vehicle, you can start with the sticker price (also known as the MSRP). Take into account any savings from dealer negotiations and manufacturer rebates.

Then add the cost of options and “destination fees” on new cars. Estimating the sale price of a used car can be more difficult. Start with the seller’s asking price, but you may be able to negotiate a lower price. Use online pricing guides or look up local online classified ads for comparable vehicles to obtain an idea of a fair price.

You may enter the rate you are offered if you have been prequalified or pre-approved for a loan.

Interest Rate

You can determine average interest rates by selecting your credit score from the drop-down menu at the top of the calculator. Online lenders are also an option. 

Trade-in and Down Payment

Enter the total amount of money you will put toward the new car, in addition to the trade-in value of your existing vehicle, if applicable. Appraisals and estimated pricing information are available online.

It is essential to check the trade-in value and not the retail price (the price at which the dealer sells the vehicle). A cash purchase offer can also be obtained from local CarMax stores or online through services like Vroom or Carvana as a baseline. 

Number of Months

Enter the loan term (the number of months over which you will pay back the loan). Car loans are typically structured in 12-month increments, with standard terms being 24, 36, 48, and 60 months. A longer loan term will result in higher interest rates.

Additional Tips for Using a Car Loan Calculator

It is crucial to consider the total amount you will spend on the loan and the monthly payment. A lower price may seem appealing with the calculator, but it can also result in significantly higher interest rates and costs.

You may also incur additional costs since the calculator does not include state and local taxes, dealer documentation fees, and registration fees. You can find these costs online or by contacting your local dealership.

Car loan calculators provide additional helpful information besides calculating monthly payments. You can also experiment with different interest rates and loan terms. You’ll be able to negotiate with lenders and dealers and ultimately select the most appropriate auto loan.

Auto Loans for Veterans With Bad Credit

If you have bad credit, it will be difficult to get approved for an auto loan. In this case, you may need a lender who offers subprime auto loans. If you are not approved for one of these loans, you may be able to find a guaranteed military auto loan. Alternatively, you can consider “buy here, pay here” places as well as adding a cosigner.

Military car loans (veteran or active duty) must be accompanied by a copy of your military ID or DD 214. You will also need to provide your LES or proof of income to the lender, along with a valid driver’s license. Besides the military discount, military auto loans may also offer the following benefits:

• Easier approval odds
• Lower interest rates
• Flexible payment plans
• Lower down payments

 

Auto Loans for Disabled Veterans

Veterans with disabilities can apply online for unsecured personal loans. These loans can be used for more than just paying off a car loan. The government offers handicap accessible vehicle loans which are adjustable to veterans who were discharged under honorable conditions.

In particular, online loans can be beneficial if you are limited in mobility. You’ll only need an internet connection to apply online if you need financing. The only factors used to determine your loan terms or interest rate are your credit score and loan amount.

Here are the different options for disabled veterans who need an auto loan.

VA Automobile Allowance

If you cannot drive due to a service-connected disability, you may qualify for an automobile allowance. Veterans with knee and hip immobility are also eligible to receive adaptive equipment benefits from the VA.

To qualify for this automobile grant, eligible veterans can receive a one-time payment of up to $21,488.29, when meeting the following characteristics to qualify for VA benefits:

• Loss, or permanent loss of use, of 1 or both feet, or
• Loss, or permanent loss of use, of 1 or both hands, or
• Permanent decreased vision in both eyes: 20/200 vision or less in your better eye with glasses, or greater than 20/200 vision but with a visual field defect that has reduced your peripheral vision to 20 degrees or less in your better eye, or
• A severe burn injury, or
• Amyotrophic lateral sclerosis (ALS), or
• Ankylosis in 1 or both knees or hips

The veteran completes VA Form 21-4502 and submits it to the Regional Office (RO), so they can:

• Whether the veteran is eligible for the benefit as a result of a previous rating decision.
• If the veteran has previously received this benefit.
• The veteran cannot receive the Automobile Allowance if they have already received it once.
• Once the RO determines the veteran is eligible for the benefit, the RO will complete Section II of the form and send it to the veteran.
• The veteran acquires the vehicle, completes Section III, and returns it to the RO.
• The seller sends the invoice for the vehicle to the RO for payment.
• The RO finance department pays the seller for the automobile.

VA Adaptive Equipment Grant

Veterans with disabilities are eligible for a VA equipment grant to help them buy or modify a specially adapted vehicle.

The following adaptive equipment may include:

• Power steering
• Power brakes
• Power window lifts
• Power seats
• Special equipment to help a person in and out of the vehicle

The veteran must complete the VA Form 10-1394 to apply for Adaptive Equipment Allowance. The VA outpatient clinic usually provides this form. The veteran fills out the form, which is then forwarded to the finance department of the local VA Regional Office by the prosthetics department.

When the application is forwarded to the RO, the finance department will determine whether the adaptive equipment is pre-approved for reimbursement based on the following:

1. Effective date of entitlement
2. A veteran’s service-connected disability
3. A special authorization from the local VA outpatient clinic

If these requirements are not met, the finance department will return the request to the VA outpatient clinic. The Chief Medical Director will review the claim and the prosthetic department will complete VA Form 10-1394 upon approval. It will be sent to RO finance for payment. Veteran or seller/installer benefits can be paid.

Reliable equipment can be replaced, repaired, or reinstalled with an Adaptive Equipment claim.

Claims for Adaptive Equipment Allowance may be approved more than once, unlike claims for Automobile Allowance.

Using a Personal Loan to Buy a Car

You can use a personal loan to buy a car, but there are specific factors to consider. Most personal loans have no restrictions on how they can be used. This is convenient because it gives you a lot of flexibility, such as buying a car.

Pros and Cons of Financing a Car With a Personal Loan

In most cases, an auto loan is more accessible and cheaper than a personal loan when purchasing a car. This is due to the following reasons:

1. Auto loans are easier to qualify for.
2. The interest rate will likely be lower.
3. Other loan fees are less likely to be charged.

You will not be penalized with multiple credit pulls for getting quotes on different types of loans if you make all your credit inquiries within 30 days.

Additionally, preapproval allows you to negotiate from a position of strength before visiting a dealer. Firm loan offers make it easier to negotiate because the dealer has to beat the offer, or they risk losing you.

Auto Loan vs. Personal Loan

Leasing a Car as a Veteran

Car buyers are familiar with the process of purchasing a new vehicle. However, most people are unaware of how leasing a new automobile works. Here is a comparison of leasing versus buying to assist you in deciding which is best suited to your needs.

What Is a Car Lease?

Leases can be a great alternative to buying a new car at a lower monthly payment. Benefits like no maintenance and no commitment attract many people. You can also lease a new vehicle roughly every three years. Tax deductions are available to some business owners who lease as well.

Most leases require no down payment. However, there are some limitations. Leases, for example, may restrict mileage to keep the car’s value. Exceeding these limits can be expensive.

How a Car Lease Is Different Than a Car Loan and Lease Payments

With a lease, you will return the keys to the dealer if you plan to lease or buy another car. A residual fee will apply if you keep the car with depreciation factored in. Sometimes you may get a balloon payment. Know the residual amount before signing a lease, in case you decide to keep the car because most leases have early termination penalties.

Pros and Cons of Leasing

You may be a good candidate for leasing if:

• The vehicle you want has lower monthly payments – Many leases offer lower monthly payments, which can help you afford a higher-end car.
• You wish to drive a new car every few years – Some people find it exciting to step into a showroom, have the keys handed over, and drive away in a new vehicle every few years.
• You are concerned about maintenance and trade-in hassles – Vehicle trade-in values can be very disappointing, and not having to deal with this can be a deciding factor.
• You can keep your mileage low – It is possible that you will not drive much in the future so you don’t need to worry about mileage.

However, purchasing maybe your best option if:

• Leases can be complicated and expensive – Especially if you plan to refinance to a standard loan at the end of the lease.
• You expect to put a lot of miles on your car – Leased vehicles come with a mileage limit per year. The limit may be negotiated but at an additional cost.
• You expect to keep the vehicle for more than three years – A lease is the best option for those who anticipate returning the car at the end of the term.
• If you wish to customize or modify your vehicle – it can void the lease and result in additional penalties.

Breaking a Car Lease While in the Military

What happens if you are deployed and have a car lease? According to the legal website Nolo, the Servicemembers Civil Relief Act (SCRA) allows you to cancel a lease without incurring early termination fees if the servicemember (or their dependents) uses the vehicle for personal or business purposes.

Armed forces personnel might terminate a car lease signed before entering active service if their call or order lasted at least 180 days.

During active duty, you may be able to break a lease if you receive orders for:

1. A permanent move outside the United States (including Alaska or Hawaii)
2. Change of station from Alaska or Hawaii to another location outside of those states
3. A deployment of 180 days or more

Be sure to provide your lessor with a copy of your military orders when terminating the lease. After receiving those documents, you will have 15 days to return the vehicle, and the lease will be completed.

How Veterans Can Refinance Auto Loans

A refinance replaces your old loan with a new one with a lower interest rate, which your credit score heavily influences. Your interest rate will typically be lower if your credit score is high, but you may qualify for a lower interest rate if your credit score has improved.

Benefits and Considerations

It makes the most sense to refinance your car loan. Over time, you can save a lot if your interest rate drops. If your initial 5-year loan interest rate is 4.5 percent, you can refinance it to 3 percent. This saves you $14 per month, but over the life of your loan, you will save about $840.

Be careful, though. You might have to pay more each month if a lender offered a lower interest rate but a shorter repayment term. Additional fees may be tacked on to refinance in general, so understand the costs upfront.

The Bottom Line: Best Car Loans for Veterans

Hopefully after reading this guide, you have a great understanding of how obtaining auto loans for veterans works and which option is best for you. Overall, if you are eligible for membership in USAA as a veteran, we recommend that you check it out.