So the time has come to purchase that vehicle you’ve had your eye on. But what kind of loan should you get to pay for it? Any quick search on the Internet brings up literally hundreds of companies that offer loans. Some also offer “military car loans.” What are these “military car loans.” about, and what advantages do they offer?
The main difference between a military car loans and a regular car loan is simple. The military car loans is for those who are currently serving on active duty and military retirees (20 years served). But what sets them apart from the usual car loan? Low Interest Rates – Military car loans generally have lower interest rates than other types of loans. Here’s a quick example about the power of interest rates. If you take out a $15,000 loan to be paid off within four years at a 10% interest rate. You’ll end up paying $380.44 a month, or $18,261.12 total when all’s said and done. If you have the same exact loan at a 7% interest rate, you’ll end up paying $356.19 per month. Or $17,241.12 total.
A few percentage points equals a few hundred bucks a year. This can make a big difference when you’re trying to balance your budget.
Military car loans can offer a lower down payment compared to regular loans, which means you’re required to pay less money up front. This can come in handy if you don’t have a lot saved up to buy your vehicle.
Easier Approval – If your credit rating is lower than average, or you have a limited credit history, you may have an easier time getting approval with a military car loan compared to a regular car loan. In most cases you can apply for a loan and get approved online.
Longer payment periods – Military car loans are also known to have relatively longer repayment periods, which means that you’ll have lower monthly payments. Additional discounts and rebates – Some lending companies also have discounts and rebates if your car loan is used to buy a new vehicle.
If you have enough or nearly enough money to buy a car outright – If you can pay for the full amount for your vehicle up front without putting yourself in financial hardship, the amount you’ll save on interest rates alone ($7,000-$8,000 from the above example) makes it worth it.
And if you almost have enough but not quite, it’s worth it to scrimp and save for a few extra months. Put yourself on a budget plan and contribute more money each month to your “auto fund.”
They may call them military auto loans, but these loans are offered by private financial institutions, so you’re subject to the same rules and potential penalties as a civilian taking out a loan. On top of that, an auto loan, unlike an unsecured debt, cannot be written off by filing for bankruptcy. If you end up defaulting on your loan, it will severely damage your credit rating and ability to take out loans in the future.
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