Veteran Auto Loans

Does the VA offer vehicle loans?

The Department of Veterans Affairs offers vehicle loans throughout the country. These auto loans offer veterans and active-duty military members good standing with their VA insurance benefits and the opportunity to finance a new or used car purchase and get quick turnaround, cheap monthly payments.

If you are a veteran or your family member is currently serving, you will want to consider taking advantage of the VA’s vehicle loan program. It is a great way for veterans to save money and enjoy fast turnaround times when getting approved for financing a new or used car purchase! Not only are they interested in helping service members that have served our country, but they also have an interest in helping those that are disabled.

Veteran auto loans are available to veterans who are currently serving in the National Guard and reserves or those who are honorably separated from the military. Some of the benefits that you get with a veteran auto loan include:

• Loans with low or no down payments. In addition, interest rates are typically lower than other loans on the market because VA lenders have access to much higher credit scores, as well as lower rates of default.
• Tax-free payment options. Payments made with a veteran auto loan are tax-free because of the VA’s special status. While veterans can normally deduct their loan payments from their federal income taxes, they cannot do so with a VA loan.
• No annual or late payment fees. This means that as long as you keep up with your payments, there will be no excessive fees associated with veteran auto loans.
• Repayment incentives. Typically, VA auto loans have some repayment incentive that will help you keep your payments low while you still serve in the military or certain reserves.

How to get a Car Loan for Veterans

The first thing you need to do is find a local car dealer affiliated with the VA. You will want to do this because they provide the loan with lower interest rates and better terms than most car dealerships in your area.

The next step is to go through a standard car loan application process with one of the dealerships in your area. Once you have done this, you will be able to receive an auto loan approval letter from your local branch of the VA. The process is simple: All you will need to do is fill out one application form and provide a few documents that the car dealer requires. Once they have received the loan approval letter from the VA, they will be able to lend you the money you need to purchase a new car using a VA auto loan.

After purchasing the car, you will start making monthly payments until your loan is paid in full. This allows your money to finance the vehicle and not pay interest on your credit card balance.

Another benefit of VA auto loans is that no pre-existing conditions may prevent you from being approved for an auto loan. If you have an unfavorable credit rating, this will not prevent you from securing a car loan with one of these government-backed loans.

Car Loans for Veterans with Bad Credit

Veterans with bad credit have options for securing VA car financing. The primary benefit of veteran auto loans is that you can purchase a car with little or no money down when your loan is approved. This can help you get the car that you need and want by giving you a lower down payment, a longer loan term, and the opportunity for an interest rate reduction. If your credit score does not meet conventional lending standards, consider getting pre-approved for a VA auto loan before you start shopping for cars.

You must be honorably discharged from military service to qualify for a VA auto loan. Active duty service people are also eligible for these special loans. In addition, you must be planning on using your vehicle for “personal use.” The VA does not offer car loans to people who are operating under a business license.

If your credit score is less than 680, the VA recommends that you get pre-approved before shopping for a vehicle. It will help ensure you can secure financing before making any purchase decisions regarding an automobile. The VA also recommends not purchasing a new car from the dealership. Instead, get a pre-owned vehicle from a private seller. 

Five tips for Car Loans for Veterans

1. Secure a loan before you make a purchase. At the very least, get pre-approved for a VA auto loan by bringing in your income and information about your credit history for review by your lender.
2. Shop for cars outside of the dealership. The lowest price may be on a private seller’s lot, not at the dealership. Bring your loan approval letter with you when shopping for vehicles so that you can secure financing before firms learn about your credit score or other factors that may affect whether or not you will get approved for an auto loan.
3. Use any down payment money to pay off other debts first. Before making any car purchases, take care of all existing debt, including credit card bills and personal loans. Once you have cleared these loads, prioritize a down payment on your car and make it final.
4. Shop for cars with low mileage and high engine power. Some private sellers may offer a trade-in that is not worth much as a payoff amount but is still worth more than the amount of money you put down for the vehicle. If this is the case, consider taking advantage of this even if you receive a lower price.
5. Consider purchasing a used car with good mileage. Many veterans prefer a used vehicle over a brand new model. If you can complete repairs yourself, you may find this is less expensive than buying a new model and paying someone else to fix it when it breaks down.

Requirements for Veteran Auto Loans

You must have served at least 90 days in active duty military service or a full period of active duty in the National Guard or Reserves. You also must be honorable discharged from the service and meet the minimum credit standards established by the VA. Once you are approved for a veteran car loan, you will be able to get financed no matter what your current credit score is.

Once approved, you will receive a VA loan approval letter containing all the information about your upcoming financing plan. You must settle on a long-term payment plan and make monthly payments until the balance is paid off. 

 In addition, you may have to submit several additional documents for your application to be processed. The documents you will need can vary from case to case, depending on the type of car loan requested.

Veteran Car Loan Approval

You must do certain things for the VA to approve your veteran car loan application. You must provide a copy of your military discharge information and any other documents that prove your eligibility to apply for financing from this program. In addition, you will need to prove that you have an acceptable credit score for your loan application to be accepted.

One of the biggest benefits of a VA auto loan is that there are no pre-existing conditions that may prohibit a borrower from getting approved for this type of financing. In addition, bad credit history is not going to prevent you from being able to secure a local loan approval with the VA auto program, regardless of how derogatory your report may be.

The VA Auto Loan Process

If you are interested in getting started on your veteran car loan application, here’s what needs to happen next: 

1. Locate a car dealer that is approved by the Veteran’s Administration.  
2. Contact your local dealer and have them run a vehicle credit report. This will allow you to see what your credit score is. 
3. The next step is to go through the auto loan application process with the dealer you are working with. 
4. Once that’s complete, they will send the information to one of the VA dealers in their network or have the VA directly contact you to discuss your options for financing and set up a payment plan. 
5. If your credit score is below 620, additional documents may need to be provided for your loan application to be approved by the Veteran’s Administration. You can purchase a car with a low upfront payment and reasonable car finance terms.
6. Once your paperwork is signed, you will receive a letter from the VA indicating that you have been approved for an auto loan.

Do military members get better car loans?

Military members can enjoy several different benefits when it comes to auto loans.

No Down Payment Car Loans

When you join the military, you will be responsible for paying a lot of money each month. As a result, very few service members have enough cash to cover the cost of a down payment for a new car. Fortunately, most car dealerships in the United States offer 0% down payment auto loans. Service members can secure these loans without a lot of cash.

Collateral Free Auto Loans

The collateral-free loan is one of the best auto loans for military members because there are no assets that you have to pledge as a security for the loan.  This type of loan requires no asset documentation and does not require you to put up any sort of collateral. In most cases, all you need to do is provide proof that your income meets an acceptable level and that you will be able to repay the car dealer when your new car loan comes due.

Low-Interest Auto Loans

One of the other benefits of high-risk auto loans for military members is the low-interest rates you can secure. As a member of the military, you will be able to get a low-interest rate car loan that is comparable to the best deals available in most states.

Easy Pay Auto Loans

The easy car loan allows military members to pay their monthly vehicle finance payment at any time convenient for them. This means you can make your monthly payment on Sunday night, Monday morning, or Wednesday afternoon if you want to do so. You do not have to stick to the traditional schedule that most car loan lenders require.