Life in the military creates opportunities and obstacles. Your finances need the opportunity to flourish without any additional obstacles and military loans are available to help. Understanding the various types of military loans available is an important step to also understanding the exact ways each one offers a hand up during hard times and/or helps improve the quality of your lifestyle.
What types of uses do military loans have today? What are the qualification requirements for various military loans programs? Many military loans are like loans offered to civilians albeit with additional interest rate and other benefits. Some military loans are written specifically for U.S. veterans and military personnel family members. Gain more understanding about military loans by reading important information ahead today.
Who Needs a Military Loan
Active and veteran members of the U.S. military services experience the same life challenges as do non-military civilians. They also experience specific military-related stressors and issues, which potentially lead to additional financial hardship. What are several reasons U.S. military personnel need military loans?
Military pay is steady but not always high. Military personnel with families and/or higher living expenses might be forced to stretch paychecks more than normal. When unique situations requiring extra finances such as unexpected home/auto repairs occur a military loan might be the only option available. Military life is also active and requires frequent relocations. While certain moving expenses are covered, additional unexpected expenses sometimes arise during a major move. Additionally, spouses of military personnel have a hard time keeping (and getting new) higher paying jobs due to frequent moves. Additional reasons people need military loans include:
• Sudden moves cause military families to temporarily pay two mortgages until their old home is sold.
• Payments are sometimes accidentally not made while deployed.
• Military members receive more credit offers but fewer debt relief options.
• Admission of debt problems to superiors might jeopardize security clearance status.
The Military Lending Act
Starting October 3 of 2016 most consumer loans available for active-duty U.S. military personnel were required to comply with terms/conditions as set forth in the Military Lending Act (MLA). The MLA, which is still in effect today was created to provide specific lending protections for U.S. military personnel called to active-duty status. Payday, vehicle title and certain installment loans are protected by the MLA. Deposit advance products and overdraft lines of credit are also protected. Credit secured by purchased property such as car loans secured by a purchased vehicle or mortgages secured by a purchased home are not protected by the MLAs.
Types of Military Loans
Certain types of military-based loans are similar to civilian consumer loans. For example, personal, bad credit, auto, medical/dental and home improvement loans are all available for military personnel. Special loans for military families are also available such as childcare & education, military spouse, engagement, wedding, travel and relocation loans. Credit cards available only for military members are also available at various interest rates and for multiple purposes. A host of financing options for U.S. veterans are also available including:
Uses for Military Loans
Military loans are used for a variety of functions such as those needed by civilian individuals and families. Loans are used to consolidate debt, purchase cars or motorcycles and finance home improvements/repairs. Military loans are also often used for special purposes. For example, a personal military loan might be taken out to help pay for an engagement ring or finance a wedding. The U.S. military covers certain relocation expenses. Moving sometimes costs more money than the funds allotted as compensation, however. A military relocation loan helps make the move happen smoothly and with more comfort for the entire family.
Military loans are also used for emergency purposes. Sometimes unavoidable emergencies happen in military life and financial assistance is necessary. Bereavement loans of approximately $1,000 are available for survivors of deceased military members when government benefits and insurance settlements are insufficient and/or delayed. Disaster relief loans help military families who live in states/areas declared as federal disasters and are experiencing financial hardship. Military convalescent loans provide funds to military members injured during active duty. Military bereavement, disaster relief and convalescent loans all provide approximately $1,000 to qualified applicants with varying lengths of zero interest repayment periods.
Some military loans are used for short-term purposes. Short-term military loans are especially helpful to use as replacements for loans with higher interest rates such as payday loans. Short-term military loans are also used to cover sudden unexpected medical or dental expenses, education-related expenses for a child or tax debts.
Qualification requirements for military loans are in some ways the same as requirements for civilian consumer loans. Your credit score, income and employment stability are all taken into consideration for military loans. Some additional requirements for military loans do apply, however.
The VA home loan program is designed to provide financing to active and veteran U.S. military personnel. Requirements include a minimum of 181-days active peacetime service or 90-days active wartime service. National Guard or Reserves service members are required to have served a minimum of six years to qualify for VA home loans. Military loan qualification requirements for surviving military spouses include:
• Deceased husband/wife must have died during active service or from a service-related disability.
• Husband/wife is missing in action (MIA) or a prisoner of war (POW).
• Deceased husband/wife was a completely disabled veteran who died of causes other than his/her disability (approved in certain situations only).
VA home loans require the home you purchase or refinance to be your primary place of residence. Additional qualification requirements for military loans also apply. Please consult the VA website or your military loan lender of choice for more information on qualification requirements applicable to you.