Getting Military Loans With Bad Credit: Why Military Personnel Have It Better


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For many bad credit borrowers, the challenge of meeting the monthly financial demands can be extremely difficult. It only stands to reason that securing cash injection in the form of a loan is the best option in the circumstances. But those seeking a military loan with bad credit tend to have greater confidence in securing the funds they need.

Why is this? It is because lenders have a different attitude towards members of the military. Is this fair? Actually, given the normal conditions that affect the chances of securing loan approval, they are. Remember, military members are government employees, so enjoy a greater level of job security. This is attractive to any lender.

But is the advantage really as great as it seems? Are military loans easy to secure? Or do those military applicants face the same challenges that civilian applicants do?

Why Military Members Are Different

The simple reason that members of the military are seen to have an easy ride towards loan approval is that they do have significant advantages over civilian applicants. The result is that getting military loans with bad credit is easier, though it would be a mistake to think approvals were guaranteed.

The most obvious reason is that military personnel are government employees and are therefore immune from the threat of redundancy. In times of austerity, government recruitment policies are altered to reduce the number of new recruits; they do not lay off existing personnel. As such, job security and, therefore, income reliability is very high.

Any lender will admit that these are key factors in securing loan approval, so it becomes difficult for them to justify rejecting a military loan application. The only grounds to do so is if the repayments are not affordable, keeping in mind the 40:60 debt-to-income ratio that lenders everywhere apply.

Other Military Benefits

While job and income security are certainly important, and bad credit scores are generally minor matters anyway, it seems that military members are assured of the best possible terms when seeking a military loan with bad credit. In fact there are more benefits available too.

The most significant is the cut in interest rate that personnel received when on active duty. Awarded through the Soldiers and Sailors Relief Act, members of the military who are on active duty can see the interest rate on all of their loans (military and civilian), both prior to and during military service, reduced by as much as 6%. With reduced expenses on existing loans, meeting repayments is easier so that securing loan approval in the future becomes even easier.

It is worth pointing out that the interest reduction extends to private loans too, not just military loans. But this means that contacting the lender to notify them of your entitlement is usually necessary. The interest reduction must be backdated to the date that active service began, and it ends on the date that service ends.

Terms To Expect

So what are the terms to expect when applying for a military loan with bad credit? Well, for a start, the interest rate charged will be less. This is logical since the risk of defaulting is so small. Job security is part of that, but also the form of repayment has an impact.

Repayments are usually deducted from the monthly salary and diverted to the lender. This means the borrower does not have to remember to make repayments, and the lender does not have to worry about receiving them. Understandably, this feature makes securing loan approval simple.

Another term to seek is to have the repayment period extended to the longest possible. This helps to keep the monthly repayment sum low, thus making even large military loans affordable.

 
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