Veterans Personal Loan Guide
Personal loans are a varied and accessible way for veterans and their families to obtain financial flexibility. Whether adapting to civilian life, consolidating debt or planning a major purchase, veterans often find personal loans their most attractive financial option.
Who provides personal loans for veterans?
Veterans are not limited to specific lenders when looking for personal loans. However, there are more than 200 Army affiliated financial organizations that cater to the needs of veterans and others related to the military.
Some of them, such as the Navy Federal Credit Union and the USAA Federal Savings Bank, only work with active and former military members and their immediate families. Although these institutions do not always have the lowest annual interest rates (APR), they generally offer accessible loans with APR caps that limit debt potential. Some institutions that belong to the category of military-friendly banks are among others:
- Bank of America
- Wells Fargo
- PNC Bank
Despite their accommodations, the preferential treatment does not always extend to personal lending programs. Other non-military lenders could offer better and more accessible conditions. Borrowers are advised to understand the requirements and specializations of a number of financial institutions so that they can identify the most favorable lending opportunities for their specific situation.
How can one prequalify for a personal loan?
One of the best ways to evaluate potential loan products is to go through the pre-qualification process with multiple lenders. Most lenders will perform a soft credit check and an initial analysis of a customer's financial profile (i.e. income, credit history, outstanding debt, etc.), and then offer preliminary terms that suggest the final borrowing option.
If the lender grants the pre-qualification, the customer can accept the offer and proceed with the formal personal credit application. Nearly all of these institutions offer easy online pre-qualification. For those who want to perform many prequalifications at once, many personal finance companies can quickly provide your information to multiple lenders.
Best personal borrowing opportunities
The available loans range from $1 to $100,000 and have an annual interest rate between 5.95% and 36% as of October 2020. A customer's access to these products depends on several factors, including employment, debt ratio and credit history.
For people with excellent credit
People with good financial stability may find that conventional lenders without military connections offer the best rates. This list of lenders with low interest rates is an important point of attention:
Lightstream: Currently, this division of Truist offers the lowest rate in the market at 5.95%, and provides loans of $5,000-$100,000 over 2-7 years term. Securing this market-leading rate requires excellent credit (800 FICO credit score or more) and enrollment in automatic payment. Financing is available immediately upon completion of loan verification.
SoFi: Their low APR of 5.99% includes a 0.25% discount for automatic payment and is only available to highly qualified candidates based on income and credit history. Loans range from $5,000 to $100,000 over 2 to 7 years and there are no start-up fees. It can take several days for the money to arrive.
Best Egg: To be eligible for an interest rate of 5.99%, a credit score of at least 700 and an annual income of six digits is required. Loan amounts range from $2,000 to $35,000, and the money is available within one business day. Best Egg does not require automatic payment to receive their lowest interest rate.
Negative: Although these companies offer low interest rates, their strict qualification thresholds make these favorable terms inaccessible to many customers.
The best personal loan options for military personnel
Although they do not necessarily have the lowest rates, their products are generally more accessible to people with an imperfect credit and financial profile. Also, their 18% APR ceiling helps customers avoid getting into debt.
Pentagon Federal Credit Union: PenFed's 6.49% APR is the fourth lowest rate in the entire market, and their range of $500-$20,000 accommodates loan amounts far below the minimum for other lenders with similar rates. Loan approval requires a stable source of income and a fair credit rating (anywhere from 580-699). However, PenFed offers the unusual option of including a cosigner in loan agreements.
Disadvantages: There is no pre-qualifying option, and for those looking for debt consolidation, PenFed will not pay their customers' creditors directly.
USAA: This exclusively military organization offers competitive rates of 6.99% to 17.65% on loans from $2,500 to $5,000 (these rates include a 0.25% discount for automatic payment). Loans have no minimum requirements, no prepayment fees, and accept joint applications where two persons are responsible for paying off the balance of the loan. Loans are granted with a term of 1 to 7 years and no fees are charged for providing the loan.
Disadvantages: This is a relatively small range of possible loan amounts, with an extremely low maximum value. The approval includes a hard credit check that may temporarily damage the credit score.
Marine Federal Credit Union: The largest credit union on the planet has no origination cost and no minimum requirements, as well as loan amounts of $.01-$50,000 at 1-5 year term. Loans for home improvement are also available on terms of up to 15 years, but at an increased interest rate of 15.29%-18%.
Disadvantages: NFCU's 8.19% rate, while competitive among most credit unions, faces more affordable competition in the overall market. The company also does not offer prequalification and performs a hard credit pull that hurts its credit score. The money is not immediate, it takes 3+ days to be delivered.
For people with bad credit
These options exist outside military financial institutions and generally do not include loan products for veterans. However, they do provide options for veterans who do not meet the qualification standards of the institutions discussed earlier.
OneMain Financial: The main advantage of OneMain on the credit market is its accessibility. Interest rates range from 18%-35.99%, but the company accepts joint applications and allows customers to secure their loans through collateral (usually a car, but this collateral option for motor vehicles is not available to active military personnel and their immediate families). These secured loans typically result in a lower APR on a loan product. Depending on the state, customers may be required to pursue a minimum loan amount.
Disadvantages: OneMain charges a fee, either a fixed amount of $250-$400 or a 1%-10% fee on loans of $1,500-$20,000. Customers may also be required to meet the company in person at one of their more than 1,600 locations in 44 states.
Avant: This lender offers the most affordable rates (from 9.95% APR) to customers with a credit score of at least 580, the lowest threshold for fair credit. Flexible payment options are available as customers can change their payment date up to one day prior to maturity. Also, the money is often delivered within one business day.
Disadvantages: Avant charges an origination fee of up to 4.75% of the proceeds of the loan and does not offer options to co-sign or otherwise secure a loan. They also require a credit qualification standard that is too high for some loan seekers.
Loan Point: This lender provides loans of $2,000-$35,000 at 15.49%-35.49% APR to borrowers with a credit score of at least 585. LendingPoint allows changes in the payment date, but also requires an income of at least $20,000 per annum and a debt ratio of less than 40%.
Disadvantages: Borrowers in severe credit situations are not eligible, and options for co-signing and insuring a loan are not available. LendingPoint also charges a 0%-6% origination fee.
For those who have difficulty meeting the requirements for a conventional loan
Each branch of the army maintains an aid organization that provides financial support to veterans and, in many situations, to their close relatives. This assistance is usually provided in the form of interest-free loans and non-repayable grants. Military relief organizations specialize in distributing emergency funds on a case-by-case basis, and applicable emergencies include, but are not limited to:
- Supplies for children/babies
- Rent payments
- Vehicle repairs
- Travelling in emergencies
- Dental care
Veterans can submit requests that must be assessed by the employees. However, each aid organization has a different approach to this process:
- Navy-Marine Corps Relief Society: Clients must make an appointment at a local NMCRS location and complete an application for financial assistance and an appointment fact sheet. Veterans looking for a quick loan of assistance or emergency aid can walk in without making an appointment.
- Army Emergency Relief: Veterans within a 50-mile radius of a military base or facility may contact the AER officers at those locations to submit their requests for assistance. Those who do not live within 50 miles of a military installation may call the U.S. Red Cross at 1-877-272-7337, who are authorized to work on behalf of the Company.
- Air Force Aid Society: Those seeking assistance can simply fill out and submit an online form describing their specific situation.
- Coast Guard Mutual Assistance: Specific requests for assistance are available and can be completed online. However, they must be printed out and submitted in person to a representative of the CGMA. If none is available within 50 miles, veterans have the opportunity to cooperate with another military institution or the U.S. Red Cross.
- For more information, veterans may contact these lenders directly. They can also receive free financial support from organizations such as the Department of Veterans Affairs, or if they have been fired in the past year, Military OneSource.
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