Military Loans

What you need to know

by Heather Borden

Your ship has just docked in San Diego and will be in port for two weeks. Your chain of command has miraculously approved your leave chit, allowing you time off to visit your family across the country in Norfolk. But how do you afford the flight home?

Loans to military personnel are quick to find and easy to come by. To qualify for a military loan, you must fall into one of four categories: be an active duty U.S. military member, a full-time active reserve U.S. military member, a 20 year career-retired U.S. military veteran, or a civilian in the Department of Defense grade GS6 or above. After that qualification is met, it is only a matter of filling out the necessary paperwork and providing the required documentation.

Applying for military personal loans can be done in mere minutes. Websites for the various loan providers offer simple-to-follow web-based applications. After filling in the basics such as your full name, branch of service, and social security number, you will be directed to a second page where you can specify the parameters of the loan you are looking to obtain. A click at the bottom of the page serves as your electronic signature. Once approved, you can often have the money transferred into your bank account as soon as the next day.

But with all the different types of military loans available, which is the right one for you? That depends upon what you plan on using the money for. In the situation above where a service member needs some quick money in order to travel home to visit family, a personal loan is the best bet. This type of military loan is a catch-all. The money received can be used for items ranging from the frivolous such as buying a new plasma television to the necessary like paying your child's college tuition.

There are separate loans for auto and home buying, but they work in very similar ways to the personal loan. Bereavement loans up to $1000 are available interest-free for 90 days for military service members who have family emergencies. Officers are eligible for Leadership VIP loans up to $5000 while Senior Leadership VIP loans of $10,000 are available for E9s as well as O5s and up. There are also bad credit loans, computer loans, no credit check loans, and financial loans, just to name a few.

Loan maximums vary by type, though the general standard for a personal military loan is capped at $10,000. Applications are often processed without upfront fees, and there is usually no collateral needed. As a reward for service, the interest rates are often lower than the rates available to the general public, and the payment options are quite flexible.

A warning about military payday loans: these have very high interest rates in comparison to other loan types and should only be used after all other options have been exhausted. Walk down any commercial street outside a military base and you will be inundated by signs promoting fast cash. There are many unscrupulous payday lenders who make their living off of young, cash-strapped military personnel. The interest rates on these loans can be as high as 500% versus about 6% for a traditional military loan. Only take out this type of loan if it is your last option, and only if you can repay it in full by your next paycheck.

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