Military Loans

Choosing a Military Lender

The VA offers eligible active service members, veterans and sometimes surviving spouses home loans backed by the U.S. government. In addition, there are private lenders too. Most of the lenders that promote themselves as “military” lenders are not affiliated with the military, so careful due diligence is required to ensure you are dealing with a reputable lender that has your best interests in mind. The best way to find a good lender is through a referral from a trusted friend who can testify as to the lender’s reputation and customer service. It would still be important to shop and compare which is done very easily online. While they all are very adept at putting their best foot forward in their promotions, you can cut through the fluff when you know what to look for.

	Look for clear and concise loan documentation. Your loan costs should be expressed in straightforward terms with a clear declaration of the Annual Percentage Rate (APR) and all other costs associated with the loan.
	Look for lenders that will counsel you: Be leery of any lender who simply says, “Yes” just to get you into a loan. The loan terms are extremely important and they should match your needs and capacity to pay. Your lender should be willing to work through loan options to find the most suitable for your situation..
	Look for lenders who evaluate your whole situation: Lenders who simply look at your credit score are not necessarily giving you a fair evaluation. True military lenders will consider other factors more pertinent to your status as a military service member.
	Look for lenders that report your payment history to the credit bureaus: For many service members, a military loan is an opportunity to build good credit, so it is important that your credit activities are recorded on your credit report.
	Check with your base community service office: They may have some recommendations, and they also might compile information on lenders to avoid. The Better Business Bureau (BBB) is always worth checking with to see if there have been any complaints. The BBB has a military specific organization called Military Line that provides information and resources specifically for the military community.

Military Peer-to-Peer (P2P) Lending

One option that has appeared on the scene recently is “peer-to-peer” (P2P) lending in which loans are made through groups of people rather than banks. P2P lending has become very popular in civilian lending circles, and now, a few military-specific P2P lenders are emerging. The advantage of P2P lenders are many, first and foremost is not having to deal with a banking or lending intermediary. That can save you money in loan costs with more competitive rates and zero or low fees. Loan rates are generally much more completive, with P2P lenders as well. The loan amounts are generally higher in the range of $1,000 to $25,000.

Because your loan is usually pooled from among a group of individual people, military service members like you, a credit check is often necessary. These lenders are really investors who are willing to “invest” in fellow service members for the opportunity to earn a decent rate of return. Your loan rate will be based on your credit history, so, although good credit isn’t absolutely necessary, it will lower your interest costs. Military P2P lenders can be found online and there is no cost to apply.

Avoid Military Loan Scams, Fraud and Identify Theft

It’s a sad commentary on the times in which we live that military personnel have become prime targets for fraudsters and scammers. The U.S. Government has cracked down on some known practices such as Pay Day Loan shops which used to proliferate around military bases. In the realm of borrowing, anything that looks too good to be true probably is. So extra due diligence is required.

	Never sign documents until given the chance to fully review them.
	Work only with lenders that offer a 15 day grace period so you can have the final loan docs reviewed by an account or your base JAG.
	Never borrow from a Pay Day Loan shop that requires a signed check up front. In fact, avoid these shops altogether.
	Always check with the Better Business Bureau Military Line before agreeing to do business with a lender.
	Sign up for free active-duty alert through your credit bureau so you can monitor your credit activities.