Personal loans can be a good financing option depending on your personal situation, especially since they can be used for just about anything. Borrowers with excellent credit can likely get approved for a personal loan with lower interest rates, and in some cases, the approval and funding process can happen in as little as one day.
Most personal loan providers don’t offer discounts or special features for those who serve in the military, so it’s important to choose the best loan based on factors like interest rates, fees, loan amounts and terms, and other features in order to make the best decision for you.
USAA and Credit Unions offer personal loans for veterans
USAA offers personal loans with competitive interest rates and flexible repayment terms. Credit unions also offer personal loans for veterans, with many providing lower interest rates and fees than traditional banks. There are many credit unions that offer personal loans with special terms for veterans.
Veterans can also get personal loans from banks, but they may not have the same specialized terms as USAA or credit unions.
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What is a personal veteran loan?
A personal veteran loan is a personal loan designed specifically for veterans or military members. Personal loans are a type of financing that can be used for just about anything, such as job relocation, medical bills, debt consolidation, and others. There are a few organizations that cater specifically to veterans’ financial needs, offering personal loans meant for people with average credit with no fees and low interest rates, as well as longer terms and larger loan amounts.
Why do veterans need personal loans?
Veterans may need loans for a variety of reasons. For example, personal loans can be used to consolidate debt, finance a home improvement project, pay off medical bills, or pay for another large or emergency expense. Sometimes when veterans are returning from service, it can be difficult to get back on their feet. A personal loan can give them the financing they need to do so until they are able to secure employment or other means of funding.
How do they work?
Veteran loans work just as other personal loans do. Once you’ve done your research and compared lenders, you can apply online or with the bank or credit union in person. If your application is approved, you’ll be sent loan terms and conditions that you must read, agree to, and sign. Then, you will receive the funds via a deposit in your bank account. Typically, this happens in as little as one business day or within a few days.
Then, once you receive the funds, you can use them for whatever you need. Just remember you must start making the monthly payments right away to avoid missing payments or defaulting on the loan.
Related: How do personal loans work?
Where can veterans get a personal loan?
There are personal loan providers that have a military affiliation such as USAA, PanFed Credit Union, and Navy Federal Union. These lenders require membership before applying for a loan, but veterans can join for free. They then cater specifically to veterans and military members.
In some cases, they may offer other benefits or perks to veterans, such as discounts on car rentals or auto insurance. However, these lenders don’t necessarily offer discounts or better terms for those with a veteran status.
On the other hand, there are a number of other lenders that don’t have a military association but may also fit your borrowing needs. Check banks, credit unions, and online lenders.
Tips for veterans interested in loans
Once you decide a personal veteran loan is the right financing option for you, you’ll want to keep a few of these tips in mind:
- Consider both military and non-military affiliated lenders. There are only a few lenders that cater specifically to military personnel and their families, but there are many other lenders that should be taken into consideration. These other lenders may offer better interest rates or loan terms, so you shouldn’t limit yourself when comparing.
- Create a repayment plan. A personal loan is debt and will need to be repaid each month. That’s why it’s important to create a budgeting and repayment plan before even applying for the loan. Make sure you understand your current expenses and can afford to make these new loan payments.
- Improve your credit score. The better your score, the lower the interest rate and better the term that you’ll qualify for. If your score needs improvement, you should take some time to do so before applying for a new loan. Make sure you’re making all debt and other payments on time, and work to pay off outstanding credit card debt.
- Take advantage of all financial options available to you. For example, if you ever return to active duty, your SCRA benefits can lower your interest rates or protect you against foreclosure. There are also other programs out there that can offer financial assistance or counseling.
When is it right to take out a veteran personal loan?
Taking out a personal loan can be the right option if you’ve done your budgeting, preparation and research:
- Ensure you can afford the monthly payments and it fits into your budget.
- Research and compare different lenders to find the best option.
- Take time to improve your credit score (if necessary) in order to get the best interest rate and loan term.
Personal loans are a type of debt, so they shouldn’t be taken out unless necessary. And, you should only take out a loan for the amount you need, not more. This is because in the end, you’ll end up paying more in interest.
Related: The Pros and Cons of Personal Loans
How long are veteran personal loans?
A personal loan term is the amount of time you must repay the loan. Veteran personal loan terms vary depending on your need, but they typically range from 12 months to 84 months.
What are the interest rates on veteran loans?
Interest rates on veteran loans depend on factors like the lender, your credit score and history, your income, your debt-to-income ratio (DTI), the loan amount, and others. Some lenders offer rates as low as 5.99% but they can range up to 35.99%. There are military-affiliated credit union lenders who may cap interest rates to ensure they don’t go higher than a certain percentage, such as 18%.
Other financial resources for veterans
Personal loans aren’t the only option for veterans who need funds. There are actually quite a few resources available for both loans and other financial assistance:
- The American Legion offers cash grants for essential expenses.
- Modest Needs is an organization offering the Homecoming Heroes Grant, helping veterans who have recently returned to the U.S. with emergency expenses.
- Rebuild Hope is a nonprofit organization that offers grants to veterans of the conflicts in Iraq and Afghanistan for emergency expenses.
- The Small Business Administration offers Veterans Advantage Loans for veterans who are looking to start or grow a small business.
- USA Cares allows veterans from the post-9/11 era to apply for grants to help with financial needs.
- Veterans of Foreign Wars has the VFW Unmet Needs Program, offering small grants for veterans who need help affording essential expenses.
Additionally, the Department of Veterans Affairs offers a guide on federal benefits available to veterans, including financial resources.
Is a veteran loan a good idea?
A veteran loan is only a good idea if you truly need the financing, don’t have time to save and other options aren’t available. It also helps to have the best credit score possible in order to get the lowest interest rate and have the most options from lenders. It’s critical that you have a plan to make the monthly payments and can arrange your budget enough to afford the loan. Otherwise, you risk defaulting on the loan and getting sent to collections, which can significantly decrease your credit score.
Pros and cons of personal loans for veterans
|Many lenders work with borrowers with average or poor credit.||High interest rates for borrowers with poor credit.|
|Low interest rates for borrowers with great credit.||Debt.|
|Low or no fees.||Can affect your credit score.|
|Some lenders offer additional discounts or perks for military personnel.||Not many military-affiliated lenders are available.|
|Funds can be used for just about anything.|
Personal loans for veterans with good credit
As with most loans, borrowers are more likely to get lower interest rates and better loan terms if they have a higher credit score. SoFi, Wells Fargo, and LightStream have minimum credit score requirements of 660+, and are more tailored to borrowers who have good to excellent credit scores.
If you have good credit, you likely won’t have a difficult time finding a loan that meets your needs. But pay attention to other factors such as fees, repayment terms, and customer service reviews before choosing a lender.
Personal loans for veterans with bad credit
Even if you have bad credit, it doesn’t mean you can’t qualify for a personal loan. Upgrade and Avant (minimum score 580) are good options for those with bad credit because of the low minimum score requirement. Additionally, some lenders like Wells Fargo offer secured loan options for those who don’t have great credit.
It’s important to try to improve your credit score if you can before applying for a loan. Make sure to make all loan and credit card payments on time and try to pay off your credit card in full each month. Also check your credit report to make sure there are no errors.
How to qualify for a veteran loan
The first step in qualifying for a veteran loan is to check your credit score. Personal loan applicants with a score of at least 650 will likely get the best rates. You also may need to meet certain income eligibility requirements, such as having an annual income of at least $45,000.
Other requirements include:
- Debt-to-income ratio (or portion of your gross monthly income that goes toward monthly debt payments) should be 36% or lower.
- If you’re applying for a secured personal loan, you’ll need collateral to pledge as an asset. This can be a home, vehicle, bank account, investment account, or other valuable asset.
- Proof of identity, address, income, and employment may be required. You’ll also likely need to show your military ID.
How to compare personal loans for veterans?
There are a few things to compare when looking at lenders and loan products, including:
- Annual percentage rate (APR)
- Monthly payments
- Repayment terms
- Funding time
- Special perks or discounts
- Minimum qualification requirements
Most of this information can be found on the lender’s website. It’s important to look at all of these factors to determine whether a loan is affordable, and a lender is offering you the best loan possible.
You should also always get prequalified when possible. This doesn’t affect your credit score, but it can help give you a more accurate estimate of your monthly payment, interest rate, loan limits, and repayment options.
Factors to consider when comparing veteran loan lenders
When it comes to comparing different personal loan lenders, there are a few things to pay attention to:
|Discounts||Some credit unions, banks, or online lenders offer additional discounts for veterans. For example, some credit unions may offer cheaper car insurance, savings on car rentals, or autopay discounts.|
|Interest rates||Many veteran loan lenders will help borrowers with average or poor credit, but you’ll still want to compare interest rates to find the best one. The better your score, the lower your rate, but look for rates that have maximums or caps to ensure you won’t pay more than you can afford.|
|Customer support||Customer service and support can make a huge difference if you have questions or encounter challenges with payments during your repayment period. Check out the lender’s customer service ratings and reviews to ensure it’s a good fit.|
|Loan limits||Make sure the lender offers loan amounts that fit your needs.|
|Loan terms||While longer repayment terms give you a lower monthly payment, you’ll also end up paying more in interest over the life of the loan. Shorter terms have higher monthly payments, but you’ll save money over time. Make sure you qualify for repayment terms with monthly payments you can afford.|
How to apply for veteran loans?
- Check your credit score. The better your score, the more likely it is that you’ll be approved and qualify for lower interest rates. Knowing your credit score before starting to shop and apply can help you be more informed about which lenders to focus on. Additionally, if your score needs improvement, you can take time to do so before applying for a loan.
- Compare lenders. The first step in applying for a veteran loan is to shop for and compare lenders. Be sure to pay attention to interest rates, fees, loan terms, loan amounts, minimum credit score requirements, and any other information offered about the loan or company.
- Look for discounts or member perks. Most lenders won’t offer discounts or perks on personal loans, but credit unions or other lenders may have member perks for military personnel or veterans such as auto insurance discounts, car rental discounts, vehicle buying programs, or others. In some cases, these perks may not be as valuable, so be sure to compare other factors.
- Prequalify. If possible, get prequalified with a lender. This doesn’t affect your credit score because it only triggers a soft credit check, but it can help you get an estimate of your interest rates, loan limits, and repayment terms. Prequalification is not a guarantee, but can help you compare lenders.
- Apply. Once you’ve found a lender, it’s time to apply. Most lenders allow you to apply with an online application, which can take just a few minutes to complete. Online lenders may approve your application immediately, while others may take a day or two to hear from. Then, once you accept the loan, the funds will be distributed.
Any loans available to civilians are available to veterans, such as personal loans. There are also other types of loans designed specifically for veterans depending on their needs, such as:
- VA home loans
- Interest rate reduction refinance loans (available from the VA)
- Cash-out refinance loans (available from the VA)
VA home loans, interest rate reduction refinance loans, and cash-out refinance loans are all available through the VA and designed specifically for veterans.
Yes, military members and veterans can get loans just as civilians can. Personal loans can be used to cover unexpected expenses such as medical bills, home improvement projects, car repairs, or to consolidate debt. They can also help with finances until military members can find a job and get back on their feet.
For most lenders, you’ll be required to provide proof of income. This can come from any source including disability, retirement, investments, or a spouse’s job. The VA does not limit income for qualifying VA loan borrowers, but most lenders do require you have some steady income to qualify.
Yes, widowed veterans can get a personal loan.