Auto Financing for Military Personnel

Lenders make it fairly easy for members of our armed forces to get military auto loans at fair rates, but you should also receive special benefits and incentives. This kind of financing is designed especially for our service members, and lenders are more willing to work with you in your unique situation. Lenders who provide loans to military personnel are understanding of the fact that sometimes you just don’t have the ability to acquire good credit through traditional means (credit cards, gas cards, etc.) as you may be deployed overseas for extended periods of time. This is why they tend to be more lenient in their requirements when lending to military personnel.

Still, it’s important that you do your homework, read the fine print, and shop around for the best deal. And at Federal Auto Loan, we want to help you with these and answer questions you may have regarding military car loans.

What is a military car loan?

A military car loan is financing given especially to active members of the military. A veteran can apply for a VA loan, which could carry even more benefits than a military car loan. Military auto loans may offer perks such as 100% financing, no prepayment penalties, and lower interest rates. As long as you meet the requirements, you can receive the special benefits a military car loan can offer. Think of these kinds of loans as a small expression of gratitude for all you do, and give up, to serve and protect this country.

Questions About Military Car Loans

What are the requirements?

The most important qualification for being able to obtain a military car loan is that you must be an active military service member. You will probably need to provide proof of this. There isn’t a service time-length requirement, simply that you must be active. Then, the lender will check your credit, just as they do for traditional car loans. If you are a member of the armed services, you are practically guaranteed eligibility.

What are the benefits of a military car loan?

A military service member can usually receive better benefits, and better approval chances, than a civilian applying for a traditional car loan. The following are a list of some of the benefits that may go hand in hand with your military auto loan:

  • Lower interest rates. Typically, a military car loan guarantees you a lower APR than civilians. Lenders are more trusting that you will be able to pay the loan off, so they are willing to lower the interest percentage that you will need to pay. Even a slightly lower interest rate can translate into hundreds, or even thousands, of dollars in savings over the life of the loan.
  • An option for longer terms. With a lower interest rate and a long-term, you should have a lower monthly payment, but you wouldn’t be wasting as much money on interest payments. Keep in mind that there are even insurance premiums for service members that are usually better deals than a civilian can get.
  • No prepayment penalty. If you have the ability to pay off your loan earlier than expected, you won’t face prepayment penalties for doing so. This means that you won’t have to pay a fee for paying off your loan early (prepayment penalties exist to compensate the lender for the interest that you didn’t need to pay since you paid off your car quickly).
  • More lenient criteria. Your “risk level” is different than that of a civilian, even if you have bad credit. Lenders are much more willing to loan to a service member with bad credit than a civilian with bad credit.
  • US domicile not required. Because you don’t have a guaranteed permanent place of residence, your lender will not require this. You don’t even have to be in the US in order to apply for your loan. You should be able to get a car for your family, regardless of your current location.
  • Speedy processing. Military car loans can be processed and approved almost instantly. Because you are a service member, your loan amount should be wired to you in one or two days.
  • Online applications. To make it simpler for military men and women to get the car and the loan they need, there are online options. For your convenience, you can actually apply for your loan online, even if you are in another country.
  • 100% financing. Many times, military personnel are offered 100% financing. This means that you aren’t required to give any money up front as a down payment. The new or used car that you purchase can be used anywhere in the US or overseas, as long as you have the proper insurance.

What if I have bad credit, and want a military car loan?

Though you may have bad credit, lenders view your particular situation more positively than a civilian’s situation, even if you both have the same credit score. The reason for this is that you have a steady income from the government every month. A lender sees this as a practical guarantee that he will get his money back from the loan. A civilian doesn’t have that kind of security, at least in a lender’s eyes.

You are more likely to be approved for a military car loan with bad credit than a civilian with bad credit is to be approved. You will also probably be approved fairly quickly. After you provide proof of service, your social security number, and your address, your application request should be processed promptly, and your answer should follow almost immediately.

Though you are more likely to get approved for a military car loan with bad credit, you should still double check your credit report to make sure there are no errors on it. The three major credit bureaus that carry your credit report are Experian, TransUnion, and Equifax. Each bureau has slightly different standards, so your credit score may vary from one to the other.

As a service member, your options are great, and your loan terms should be that way as well… even if you have less-than-perfect credit. Lenders realize that you may not have had the opportunity to build your credit score like most civilians can. Lenders know that your situation is unique, so don’t worry so much about your credit score. Shop around for a reliable new or used car, a fair loan, and the right terms for you.

What is an auto loan calculator?

Though it is easier for service members to get approved for car loans, that doesn’t necessarily mean that you can get approved for any amount that you want. An auto loan calculator can help you determine a realistic loan amount for you, with monthly payments that you can afford. It may even take into account trade-ins, interest rate, and if you intend to make extra payments. This tool can also help you determine which cars will be within reach.

How should I pay for my loan?

You could work out an automatic payment plan in which your payment is automatically taken out of your checking account each month. This way, you wouldn’t even have to think about making payments on your loan every month. You could also send in a check or cash yourself each month, and decide if you want to pay a little more each time. Paying more will result in interest savings and help you pay off your car sooner (as long as there are no prepayment penalties).

Would it help to shop around?

Whenever you make a big purchase, it is important to not be too hasty and make a decision that will save you money. You may even want to see if a traditional lender will offer you a better deal than a lender who specializes in military loans. Let the lenders compete for your business… that’s the best way to get a loan with terms you are happy with. You can fill out an application through, and we’ll try to connect you to lenders and dealers who want to work with your towards financing. This could be another great resource for shopping around and comparing rates, too.

Military Auto Loan Tips and Recommendations

  1. Avoid a lease with a clause forbidding you to take the car out of state. Because the life you lead can lead to unexpected living locations, you want to be sure you can take the car wherever you may need to go. Be sure that your loan contract states this… in writing.
  2. Read the fine print. An asterisk following a claim usually means there’s a catch. Information on that asterisk is usually at the bottom of the page or section. Don’t overlook these.
  3. Sell your own car. It is highly unlikely that you will get a fair, market value offer from a trade-in. The dealer who wants to buy your car hopes to make money off of it, after all. So if you have the time, sell your car privately, and you’re more likely to get what its worth.
  4. Negotiate wisely. You want to negotiate the selling price, not your monthly payment. If you bargain for a lower monthly payment, the lender may agree to this by giving you a long-term and a higher interest rate. And that won’t save you any money.
  5. Buy at the right time. Christmas is actually a good time to get a deal on a car. During the last two weeks of December, dealers are in a hurry to sell the “old” and bring in the new. Also, late in the summer is typically when buyers are offered rebates and incentives on vehicles. If you keep an eye on the market, you may find that the same car costs hundreds, or even thousands less because of a dip in the market.
  6. Don’t buy a warranty from the dealer. Oftentimes, the warranty that a dealer will want you to buy (and he will probably push hard for it) is highly overpriced. You can still buy a warranty, but you may want to go with a third party distributor instead. And always check the fine print!
  7. Shop around, and let help. Finding the best deal may take a little patience and the ability to walk away if needed. There should be plenty of military car loan options out there for service members, so be sure to check out all your options. A great way to get the auto financing you need is to apply through We’ll do our best to match you with lenders and dealers who want to help you get the car and the loan you need.

Get on the road today.


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