Military personnel earn the privilege of discounts and other incentives from a number of major retail and financial companies. The car loan industry is no exception, and any active duty or retired member of the military should know the benefits and risks of getting a military car loan before visiting a dealership.
As a member of the military, you will have an easier time getting approval on a military car loan versus loans available to everyone. Credit rating concerns, like a poor or limited credit history, that may have stopped your attempts at financing a used car in the past are less of an issue when applying for a military car loan.
Interest rates on military car loans are, on average, lower than other loans. When you choose to finance a car with a loan for a military car, you can usually expect to ultimately spend less for the total purchase after all the interest is considered. The interest rate benefits are of particular concern if your credit rating would normally limit your loan options to high risk or sub-prime financing.
The average military car loan has a longer repayment term, which means the structured monthly payments are smaller. While the longer term does negate some of the benefits of the lower interest rates, the smaller payments are meant to be manageable for someone on a military income. Check the terms to see if you are allowed to make higher payments when able as a way of expediting the repayment schedule.
Required down payments are usually lower when you choose a military car loan, but do not let this stop you from paying as much as your budget allows up front. A lower mandatory down payment is incredibly helpful if you were unable to save up a large sum, but a higher initial payment makes the amount borrowed lower and repayment easier.
Military car loans may be easier to get approved for and repay, but they still have the risks of any other loan. Before you agree to a financing contract, you should make a detailed monthly budget. The realistic budget will show clearly how much you can afford to spend every month on your car loan payments. Use this to determine the kinds of cars you can afford and the loan structures that will best suit your finances, including the duration of your auto loan and the interest rate.
Active duty and retired members of the military can choose loans with serious benefits, including lower approval standards. If you qualify for a military car loan, consider its benefits carefully before buying your used car.
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