25 Jan The Best Place to Get a Veteran Car Loan
Currently, Veteran’s Affairs does not offer a program that guarantees auto loans to military personnel or veterans. However, veterans injured while on active duty might qualify for an automobile allowance or adaptive equipment benefit.
Luckily, there are still many great options available when it comes to getting a veteran car loan. To assist you in finding the best auto loan interest rates, we have provided the resources below. Several banks and credit unions belong to these resources.
These resources can help you find the best auto loans rates based on your credit profile, whether you are an active-duty military member or a veteran.
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How to Finance Buying a Car as a Veteran
While the VA is not an option, veterans can still secure an auto loan through several means.
We will be discussing three primary options for financing your car purchase: car dealerships, banks, and credit unions.
Car Dealership Financing
Financing through a dealership is similar to financing through a bank or credit union. The difference is that the dealer serves as a middleman and does the work on your behalf.
Once you choose the car you want to purchase, you fill out a credit application, and the dealer submits it to multiple lenders. You can then select the best option. Be aware that some dealers negotiate a higher interest rate and take the difference as compensation for their part in the financing. However, well-qualified buyers can sometimes be given promotional financing on new cars, such as 0% APR.
Another form of dealership financing caters to those with poor credit and involves in-house financing. However, the down payments required are high, and there is an increased risk of repossession.
Benefits of Car Dealership Financing
Getting financing from a dealership has several advantages.
First, buying from a dealer allows you to find financing and a vehicle in one place, unlike when buying from a private party or securing funding from another lender. Aside from the convenience and time-savings of doing everything through a dealer, you also may be eligible for special rates or other promotions.
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Financing Through a Bank
Another option for financing an auto loan is through a bank. Furthermore, there are several military-friendly bank options available.
To obtain a veteran car loan through a bank, you must work directly with the bank. While applying through a bank is an extra step, you’ll be preapproved for a loan before you step foot in a dealership or begin looking at used cars from private parties.
By providing you with a quote and a letter of commitment, the lender will save you some time when it comes time to finalize the contract once you’ve found your vehicle. In addition, by securing a specific loan amount on paper, car salespeople will be less tempted to try and persuade you to purchase add-ons that you do not need.
Most banks will now allow you to apply for loans online so you can fill out the paperwork at your convenience from anywhere.
Typically, banks will offer a lower interest rate on a new car than a used one. Many banks have age and mileage limits on the vehicles they finance, and the older the car, the riskier the loan. Because vehicles depreciate, older vehicles are already worth less, and it will be harder for the bank to recoup their money in the event of a repossession.
Still, you’ll likely receive better rates when you deal directly with a bank, as these rates won’t include markups.
Veterans can obtain financing at a reasonable price from banks like USAA and Veterans United.
Benefits of Bank Financing
Financing your auto loan through a bank has several advantages.
First and foremost, you’ll likely receive a much better rate through a bank than you would through a dealer, especially if it’s one you already have a relationship with. You’ll also save time when shopping for your car because you’ll already have financing lined up.
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Financing Through a Credit Union
Securing an auto loan through a credit union is a similar process and has similar advantages to bank financing. However, a credit union may offer even more benefits because it is a different financial institution.
A credit union is a nonprofit organization, so instead of focusing on profit, they are focused on serving their members, and members may enjoy better rates and terms. For this reason, joining a credit union may be worth considering if you meet their membership requirements.
Military credit unions provide better loan options to finance a new car than some traditional lenders because they cater specifically to military personnel. Therefore, joining a credit union could save you a considerable amount of money if you meet membership requirements. You may also be more likely to be approved for an auto loan with poor credit if you’re a member of a credit union.
Below you’ll find a list of some of the best credit unions that provide financing to veterans.
|Credit Union||Advertised New Car Loan Rate||Loan Term|
|State Employees’ Credit Union||2.95%||36 Months|
|Navy Federal Credit Union||1.79%||36 Months|
|Boeing Employees Credit Union||2.34%||48 Months|
|Schools First Federal Credit Union||2.19%||36 Months|
Data Source: https://cars.usnews.com/cars-trucks/credit-union-car-loans
Benefits of Credit Union Financing
The benefits of financing your auto loan through a credit union are similar to that of a bank with a few extra perks.
Because credit unions serve their members, you may be able to find even better rates than you would at a bank, and you’ll likely have a greater chance of getting approved with poorer credit. You also may pay less in fees with a credit union.
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Military Discounts for Car Purchase
Aside from finding the best option to finance your auto loan, there are several military discounts offered by car manufacturers to veterans that could save you even more money.
The process of obtaining military discounts for active-duty military personnel is generally straightforward. It may be possible for you to receive a flat rebate on top of the current offer if you meet the requirements. In addition, several automakers offer military discounts to show appreciation to uniformed service members and their families.
The following is a list of automobile companies that offer military discounts to veterans and current offers available.
- Acura — With Acura Financial Services’ Military Appreciation Offer, you can get $750 toward a new MDX, TLX, ILX, or RDX (excluding the NSX and PMC models) when you finance or lease through Acura Financial Services. The offer is valid until March 31, 2022.
- BMW — Military members can take advantage of the BMW Military Incentive, which includes $500 to $11,000 toward a lease or purchase of a new BMW. Veteran or military membership must be verified online to qualify.
- Ford — Those eligible for Ford’s Military Appreciation Salute are active duty military, retired and veteran members, their spouses, or those still living with their spouses. You can use this offer to buy or lease a new Ford or Lincoln vehicle.
- Honda — When you finance a vehicle with Honda Financial Services, you can save $500 on any 2020 or newer Honda vehicle. According to Honda’s official website, you may take advantage of this offer until March 31, 2022.
- Toyota — During this month and next, eligible Toyota vehicles purchasers will receive a $500 rebate if they are active-duty military members, inactive reservists, retirees, and veterans discharged within the past two years.
What About Getting a Veteran Car Loan With Bad Credit?
A veteran with bad credit may find the car financing process challenging. Some dealers will not work with those with bad credit, and your veteran discounts may not apply if you have a poor credit score.
In this case, it is better first to find a dealership or other lender that will accommodate your credit needs before looking for military discounts.
However, it is still possible to qualify for a loan no matter your credit history. Military members with bad credit and their spouses may be eligible for VA Financial loan options. Personalized interest rates and tailored payment plans are just a few of the benefits of a veteran loan for bad credit. You can get a bad credit loan with a rate as low as 5.99% (depending on your credit score) and up to $40,000 in cash.
Veteran Car Loan for Disabled Veterans
If you’re a disabled veteran, you can get VA assistance with a vehicle purchase. In addition, you might be eligible for an auto benefit if you suffered a disability while serving that prevented you from driving.
Automobile allowance and adaptive equipment benefits come in the form of a one-time payment of up to $21,488 for veterans with qualifying injuries. Veterans can apply online for these loans through the Veterans Affairs website.
Veteran Car Loan: How to Choose the Best Financing Option for You
As a veteran, it’s important to know that you have options for financing a veteran car loan. However, you should consider several factors, such as your credit score, interest rates, and the type of vehicle you want to acquire when choosing which kind of financing will best fit your needs.
The best options for financing will likely be a bank or credit union that caters specifically to military members. It may also be possible to get military discounts on vehicle purchases.