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Military Auto Loans for Armed Forces Personnel



Military car loans provide U.S. Military personnel with a great opportunity. In fact, it's a great perk available to Military personnel. Military auto loans provide active duty military personnel with auto financing specifically tailored to meet their needs. These auto loans often come with lower interest rates and longer payback options. Because military personnel have greater job security – providers of car loans for the military get a dependable source of revenue. Therefore, these lenders are able to provide military personnel with great car loans and reduced interest rates due to the low risk associated with the loan.

An advantage to a military car loan is the fact that active duty personnel present a lower risk to lenders. Soldiers get paid regularly, without interruption, reducing the likelihood of missed, or late, payments. The regularity of the military paycheck also allows for the convenience of arranging an automatic monthly payment schedule. An income this reliable is key for getting a great deal on an auto loan.

Military car loans can be offered with 100% financing eliminating any upfront costs, and extended terms to make monthly payments lower without the increase in interest rates that often come with loans that last in excess of 48-months. This is a two-edged sword. While out-pocket-expenses are next to nothing at the origination of the loan, and the burden of monthly payments is lighter, the costs will increase as the borrower is forced to pay interest on the balance over a longer period of time.

Looking at a common auto loan plan, a borrower purchasing a $20,000 car with a standard 20% down payment ($4,000), at an interest rate of 4.75%, for four years, the total costs look like this: Monthly payments of $366.66 to a total $17,599.66, and $1,599.66 paid in total interest. The same car financed at the same interest rate yields lower monthly payments of $319.78, but a total of $3,024.48 in interest payments and total payout of $23,024.48. The financial load is lighter each month, but the overall costs are significantly higher.

Leasing a vehicle may be a tempting offer to many service people. This is due to the lower monthly payments that come with lease agreement. But, there are pitfalls to leasing that may not seem so appealing to those people who frequently move. For one thing, a car lease agreement is very different from a car loan agreement, and there are no special programs for military personnel. This doesn't mean that service people can't find a good car lease deal, and approval standards may be more favorable amongst some leasing companies, and dealerships.

Most car lease agreements restrict use of vehicles to the United States. This can be crippling to an active duty military person who may be reassigned to a new post on the other side of the world. Even when reassigned to a post within the U.S., the car must be transported rather than driven in order to avoid the high costs of excessive mileage, and wear, that will, invariable, occur when a car is driven hundreds of miles in a single trip.

To take advantage of the benefits that military car loans offer, active duty military should only be considering the purchase of a car, and not a lease agreement. A military car loan does not require the service person to live in the U.S. Using the loan to purchase a car allows that person to take the car overseas with them in the event he, or she, is transferred to a post that allows for that level of equipment to be taken.

Through a military car loan, a service man or woman seldom needs a co-signer due to the reliability of his or her income. Even with a bad credit military car loan, an active duty service person can get approval within 24- to 48-hours of submitting an application. The same person also has a good chance for loan approval without having assets to secure the loan as the car itself will securitize the loan.

A further advantage to taking out a military car loan with bad credit is that it allows the active duty service person to rebuild credit that had been damaged prior to going into service. The Service Members Civil Relief Act has additional provisions for protecting active duty personnel from excessive interest rates attached to any outstanding credit debts accrued prior to going in the service as well as protection from eviction, collections, and repossessions.

Because a member of the armed forces has been given the opportunity to get a car loan, the usual processes of buying a car don't go out the window. The service man or woman must have realistic expectations as to what kind of car he, or she, is going to buy. A car that will fit in an officer's budget generally won't fit in an enlisted person's budget. The service person is best advised not to get a car above his, or her, pay grade.

Because military car loans often allow soldiers to get the loan before going to a car dealership, soldiers have the advantage of knowing exactly they to spend on the car. Also, having the money in hand to buy the car helps to avoid using the dealership for financing – something that can add hundreds of dollars to the price of the car. Dealer financing brings higher interest rates, added fees, and a pile of options that the buyer may, or may not (usually the case), need.

Like the loan agreement, itself, the purchase of any car comes with a few paragraphs of fine print. After all, the sale of a car requires the transfer of a rather valuable piece of property from one person to another. It's important for the service person to read all of the fine print that's associated with the car sale. While the wording may seem complicated, it is still plain English, which will reveal all the terms and conditions of the sales agreement.

Shop and compare. Military car loans come in many shapes and sizes with conditions that can differ drastically from lender to lender. There is no standard for military auto loans – this is not a defense department program. They are, in fact, programs set aside for active duty military personnel by lenders sympathetic to the particular needs of men and women in uniform. Even where lenders are offering special rates and conditions to service people, some offer better deals than others. The auto-makers have opened their doors to military personnel as well, with many programs tailored toward the financial lives of the military with special rates aimed at specific car models.

Lenders who specialize in military auto financing are keenly aware of the difficulties that come with life in the service. Locations change rapidly, which is why military car loans don't stop at U.S. borders. It only takes a few minutes to fill out an application on FederalAutoLoan.com. Here at Federal Auto Loan, we appreciate our men and women in service. If you are an active duty or retired military serviceman, we may be able to help you get connected with the military auto loan you need. Our application process is fast, secure, and free. And best of all, there is no obligation on your part to work with the lender or dealer affiliate we connect you with. 

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