Military veterans can face financial challenges after their service ends. Some are injured while serving, and face mounting medical bills. Others need additional training or education to land jobs when their service ends.
The 2017 Military Family Lifestyle Survey released by Blue Star Families and the Institute for Veterans and Military Families provides a snapshot of some of the financial concerns veterans often have. According to the survey, 49% of military families have less than $5,000 in savings. Further, 28% of military spouses are unemployed and trying to find work, and the 51% of military spouses who were working earned less than $20,000 in 2016.
Veterans and their families, then, might look for personal loans as a way to help cover financial emergencies or unexpected bills. Veterans might take out credit to cover an emergency, such as unexpected car repairs or a new furnace for their home during winter.
How personal loans work
A personal loan is different from auto loans or mortgages in that they are usually unsecured. This means that you don’t have to put up collateral to qualify for one.
With a mortgage loan, your home acts as collateral. If you stop making your monthly payments, your lender can take ownership of your home through the foreclosure process. With an auto loan, your vehicle is your collateral. Your lender can take possession of your car if you default on your payments.
With an unsecured personal loan, lenders can’t take anything from you if you stop making your payments — you haven’t put up any collateral. Although that means there is less risk for you, there is a negative to this: Lenders often charge higher interest rates with unsecured personal loans because they are taking on more risk.
On the positive side, personal loans are flexible. You can use the money you borrow to pay for just about anything. (Of course, it might not be wise to take out a personal loan to pay for something frivolous, like a dream vacation.)
What about secured personal loans?
You can find secured personal loans, too: These loans do require collateral, and do give lenders something to take back should you stop making your payments. Often, your home or car might act as collateral.
But other lenders offer what are known as share secured personal loans, where your savings account acts as collateral. The amount of money you can borrow is limited by the funds in your savings account with the financial institution. If you fail to make your payments, your lender can keep the money in your account.
5 personal loan lenders for military families
The key when hunting for unsecured personal loans is to study the interest rates, loan limits and fees that lenders charge. There are significant differences even among those lenders who specialize in working with military families.
When shopping personal loans, you can reach out to local banks and credit unions to see what options they have for veterans. However, it may be more convenient and affordable to work with online lenders.
LendingTree, the parent company of MagnifyMoney, can help you see offers from lenders through this helpful personal loan tool. Simply enter some basic information about yourself and what you’re looking for, and you’ll be able to compare lenders.
To help you on your search, consider the following five personal loan lenders.
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Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.34% APR with a term of 3 years would result in 36 monthly payments of $292.31.
Navy Federal Credit Union
As its name suggests, Navy Federal Credit Union serves members and veterans of the U.S. military. But the credit union isn’t open only to members or veterans of the U.S. Navy — it’s also open to those who are serving or have served in the Army, Marine Corps, Air Force and Coast Guard. Civilians working with the U.S. Department of Defense can join this credit union, too, as can the immediate family members of military personnel or Department of Defense employees.
Based in Merrifield, Virginia, Navy Federal Credit Union got its start in 1933. It had more than 8 million members as of the third quarter of 2018.
The credit union offers a standard, unsecured personal loan to service members and veterans with APRs ranging from 7.99% to 18.00%, depending on borrowers’ credit histories and the length of the loan. Members can take out unsecured personal loans with terms of up to 180 months.
There are some limits, though: Navy Federal Credit Union will only approve a maximum loan term of 60 months and a maximum loan amount of $50,000 for most of the unsecured personal loans it originates.
You can take out a longer-term unsecured personal loan if you want to use the funds to pay for a home-improvement project. Navy Federal Credit Union will approve you for a loan with a term of 61 to 84 months if you borrow at least $25,000 and a term of 84 to 180 months if you borrow at least $30,000.
Navy Federal Credit Union also offers a Shares Secured Loan. In this case, the collateral is your savings account at Navy Federal Credit Union. If you take out a shares secured loan for $5,000, Navy Federal Credit Union will hold this amount of money in your account. You’ll be able to access these funds as you pay off your loan. If you fail to make your payments, Navy Federal Credit Union can repay itself by taking these funds.
The rate on these loans varies according to their length. For shares secured loans with terms up to 60 months, the interest rate is equal to whatever rate you are earning on your Navy Federal Credit Union share account plus 2%. For terms of 61 to 180 months, the interest rate is equal to the rate you are earning on your Navy Federal Credit Union share account plus 3%. You must borrow at least $25,000 for 61- to 84-month terms and $30,000 for terms of 85 to 180 months.
Navy Federal does not charge origination fees for its personal loans.
A loan from Navy Federal Credit Union is good for those borrowers who need long-term loans with lower monthly payments. Navy Federal Credit Union allows borrowers to apply for loans with repayment terms of five years or longer, long loan terms that will result in smaller monthly payments.
Veterans who need to make costly home repairs can benefit from a personal loan here, too, as Navy Federal offers long-term loans that are designed solely to fund home-improvement projects.
Navy Federal Credit Union is also a good fit for borrowers with strong credit scores. These borrowers will have a stronger chance of qualifying for the lowest rate of 7.99%. Borrowers with weaker credit might have to shop around: Longer-term loans here come with high rates, especially for those buyers with lower credit scores.
Based in San Antonio, Texas, USAA had more than 12 million members, as of the end of 2017. This organization is open to active and former members of the U.S. military, eligible family members of active-duty personnel or veterans and cadets and midshipmen.
USAA offers unsecured personal loans with terms ranging from 12 to 84 months. You must borrow at least $2,500, but there is no maximum loan amount.
APRs will vary based on your credit. USAA says that borrowers can qualify for personal loans at APRs of 8.99% – 10.99%.
USAA does not charge any origination fees for its personal loans. USAA also says that it can often provide funds on the same day that borrowers apply for personal loans.
These loans are best for veterans who have ended their military service with strong credit scores — these veterans will qualify for the lowest possible interest rates. However, rates can rise quickly for those with weaker credit. The top rate of 10.99%, for instance, is quite high, veterans might consider shopping around with online lenders to search for a lower rate.
A USAA loan is a good fit, too, for veterans who need money quickly. It is possible to get your cash from a personal loan on the same day that you apply.
PenFed Credit Union
PenFed Credit Union launched in 1935 and today has more than 1.6 million members. It serves members in all 50 states, the District of Columbia, Guam, Puerto Rico and Okinawa. This credit union is open to active and retired military members, family members of these military personnel and employees of the U.S. government. You can also join an advocacy group such as the National Military Family Association or Voices for America’s Troops to become a member.
PenFed Credit Union offers personal loans to these military members that come with no origination fees and APRs starting at 6.49%. You can take out a loan with a term of up to 60 months. It’s important to note that this lower rate is only available to borrowers with excellent credit. Your rate might be higher if your credit is lower.
You can borrow from $500 to $25,000 from PenFed Credit Union.
A personal loan from PenFed Credit Union may be a good fit for military members and veterans who are looking for a low-cost way to borrow funds. PenFed Credit Union doesn’t charge origination fees, and the 6.49% interest rate is solid if your score is strong enough.
There are some limits, though: Unlike some of the other lenders serving military personnel and veterans, PenFed Credit Union doesn’t offer loans with longer terms such as 84 or 180 months.
Unlike the previously-mentioned financial institutions on this list, Citizens Bank doesn’t work specifically with veterans or their families; this is a traditional bank open to anyone. Citizens Bank, though, does work with veterans, mainly through a partnership with the Military Warriors Support Foundation. In conjunction with the organization, the bank awards mortgage-free homes to service members who have been wounded in combat, and to Gold Star spouses whose partners have been killed in combat.
Citizens Bank does provide quick funding for their personal loans, with the bank able to provide loan dollars often within two business days. Citizens Bank also doesn’t charge fees, and will originate loans from $5,000 to $50,000 with terms ranging from three to seven years. Depending on your credit, Citizens Bank charges APRs ranging from 5.99% to 18.99%.
Citizens Bank does not charge an origination fee for its personal loans. To qualify for a personal loan here, you’ll need a minimum annual income of $24,000 and what the bank calls a “strong credit history.”
Who is a good fit for a personal loan here? You’ll do better if you a strong credit score. You want to qualify for that 5.99%, not a rate of 18.99%. This is also a good option if you need money quickly, as some loans can close and payout within two business days.
Veterans don’t have to work with credit unions that specialize in serving military personnel or with traditional brick-and-mortar banks. They, like many customers, might find that an online bank is their best fit for a personal loan. If so, LightStream, the online lending arm of SunTrust Bank, might be a good choice.
LightStream provides personal loans with APRs of 3.34% to 16.99%, if you sign up for the lender’s auto pay system. Your rate will depend on your credit score, the amount you want to borrow and the term of your loan. If you don’t sign up for auto pay, your interest rate will run from 3.84% to 17.49%.
You can borrow between $5,000 and $100,000 with a LightStream personal loan. The terms of your loan can run from 24 to 144 months. LightStream does not charge any origination fees for its personal loans.
A LightStream loan is a good fit for a veteran who needs flexibility. LightStream offers longer-term loans with terms of up to 144 months. Stretching your loan out to that length of a term will leave you with a smaller monthly payment. These loans are a good fit, too, for veterans who have maintained a strong credit score — that low interest rate of 3.34% is a strong one. If your credit score is excellent, you might consider applying for a personal loan here.
There are plenty of options for personal loans, whether you work with a credit union that targets veterans, an online lender or a traditional bank or credit union. The key is to shop around for the lowest possible interest rate. Make sure, too, to work with a lender that doesn’t charge origination fees. There are plenty that don’t, so there’s little reason to work with one that charges this fee.
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