24 Jun What Can Veterans Expect From Trading In A Car With A Loan?
Buying a car is often more affordable for military personnel due to discounts and particular loans. When purchasing a vehicle in the military, it is still important to budget wisely and do your research before making such a significant purchase.
Many lenders offer military auto loans, which are like regular auto loans, except with better terms.
Suppose you are serving or retired from the military. In that case, you may be eligible for a military car loan with a competitive interest rate.
There are five benefits to military car loans.
In several ways, military auto loans are superior to conventional auto loans:
- Approval is easier. Service members with credit scores below the cutoff point for regular auto loans are generally eligible for military car loans. Additionally, the approval process is usually quicker.
- Rates of interest are lower. Some lenders offer military car loans at reduced interest rates, such as a discount of 0.25 percent to 0.50 percent off their standard rates. Over the life of the loan, a lower interest rate could save you lots of money in interest payments.
- We do not charge a prepayment penalty. Your lender won’t charge you a prepayment penalty if you pay off a military car loan early, such as one that comes with regular car loans.
- It was a reduced down payment. Some programs offer no-money-down loans for military auto loans so that you can save money upfront. Paying less upfront means you’ll have to pay more interest over the long run, though saving up enough for purchase will be easier.
- They are increasing the repayment period. Shorter-term auto loans usually offer lower interest rates than 36-, 48-, and 60-month loans. There are longer repayment terms available for military auto loans as well.
How to qualify for a military car loan
There are different qualification criteria for each lender. In general, you must meet the following requirements to obtain a military car loan:
- Please provide evidence of your military status, such as your active-duty military identification card or military discharge papers.
- You will need to provide your contact information, including your local address at your current location.
- Your family members can assist you in case of loan issues if you are deployed abroad by providing the following information.
Disadvantages of Military Car Loans
Any branch of the armed forces can obtain loans for military cars. Before applying for these kinds of loans, you should also consider some disadvantages. Understanding what they may be can help a member of the military or their family make an informed decision regarding their application for a military car loan.
- Availability of loans. Any lender can make military car loans, including banks, finance companies, and military credit unions. Loans may not cover certain services or duties. Rather than requesting a loan through a relative or guardian, a service member may be able to apply directly for the loan. Making an application is not always feasible for service members stationed overseas when a loan is needed.
- Higher interest rates. The interest rates on loans to military members with low, poor or bad credit may be as high as standard loan rates. Part of the reason for this is that an army affiliation rather than collateral secures military car loans. It may be challenging to get a reasonable mortgage rate if you have a poor financial history and cannot earn as much as a civilian.
- Credit requirements. Securitization may also require a cosigner or collateral in addition to the credit requirement. A military service member’s lack of a good credit profile may limit the choices of cars they can buy somewhat if it is common practice with some lenders.
- Comparison to traditional loans. A family member with a good credit history can secure a conventional car loan and potentially save money compared to a military vehicle loan. When comparing military and traditional loans, it is wise to compare the terms of military and conventional loans.
If you trade-in your car with the dealer, the process is more straightforward, but you’ll probably get less money than selling it privately. Convenience may not be worth the price difference.