Military Loans Overview
Military loans are personal cash loans made to people serving in
personnel have several sources for obtaining military loans.
Banks and credit unions are one source, but these traditional
financial institutions are often reluctant to lend to people
serving in the military because potential borrowers from the
military tend to be younger and without established credit
histories, or already have bad credit. Payday loan lenders are
another source, however, an October 2007 DoD regulation
imposed a 36 percent APR cap on military loans to military
personnel and their families. This regulation has effectively
put military payday lenders out of the military loan business,
as their rates were sometimes 400% or more. Most military
loans, however, are made by financial companies, such as
Pioneer Military Lending, that specialize in lending money to
military servicemembers. Another, often overlooked source, are
military base assistance offices and organizations that offer
financial and other assistance to military servicemembers and
their families. These loans tend to be smaller and are
designed to help military servicemembers out of financial
servicemembers cite a number of reasons for getting a military
loan. Among the reasons are unexpected expenses such as auto
repair, travel expenses, debt management and the consolidation
of other loans, the purchase of big-ticket items like
televisions, stereos, computers, furniture and appliances, and
other items popular with the demographics of younger military
people - like specialized tires and rims.
military loan industry has suffered in perception because of
the abuses of some loan companies and many payday lenders that
charged exorbitant fees and interest rates. Some unscrupulous
lenders have taken advantage of borrowers' youthful
inexperiences in handling financial matters, and have trapped
borrowers in a downward spiral of debt. This was particularly
true with payday loans, loans that were due the next payday.
If the borrower was unable to pay, the loan was rolled over
with additional fees and interest. After several paydays, the
borrower would be in a financial hole, unable to dig
result of these abuses, the US military became concerned about
the industry and its effects on servicemembers' readiness. This
resulted in the 2007 DoD regulation. In addition, the US
military has taken steps to educate servicemembers
about the dangers of high-interest and high-fee military loans,
as well as other financial considerations.
Nevertheless, military loans from financial companies remain
popular, in part because of the continued reluctance by banks
and credit unions to lend to military servicemembers. Military
servicemembers are in most ways no different from their
civilian counterparts when it comes to finances. Military people sometimes need loans
too! (Autos need repairs, for example, whether owned by
civilians or military.) And when used responsibly, military loans can be a useful
tool in helping military personnel meet their financial
Here are a
few tips if you are considering applying for a military loan.
First, determine if you really need a military loan. Military
loans should only be used as a last resort and not for the
purchases of big ticket items. If you really want that new LCD
TV, save your money for a few paydays and then buy it. You'll
save a lot of money on interest and fees. If you're unable to save
enough for that big ticket item, then you probably wouldn't
have been able to afford it anyway, much less a military loan
that would only cost you extra in interest and fees.
determine the best place for you to apply for a military loan.
Inquire first with your base assistance office, or
organization that assists servicemembers, such as the
Navy-Marine Corps Relief Society. Inquire next with your local
bank or credit union. Many military bases have banks or credit
unions that specialize in serving the military community, and
some of these banks or credit unions may be more inclined to
lend to military personnel than financial institutions
unfamiliar with the financial needs and resources of military
members. Next, inquire with financial loan companies that
specialize in lending to military personnel. We recommend
Pioneer Military Loans.
after finding a lender, determine exactly what fees will be
charged, the interest rate, and the length of the loan. Add
this all up to determine your true cost of the money you are
borrowing and then decide if the loan is worth it and if you
will be able to pay it back. If successful in obtaining a
military loan, pay it back according to the contract, or
earlier if possible.
military loans can be a great resource if used responsibly and
only when absolutely needed. And they can be a curse if used
irresponsibly. So use caution and use military loans wisely.
You'll be glad you did at some point in the future.