Best Consolidation Loans For Veterans
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Just like everyone else, many military service members and veterans also have problems with debt. If theyre deployed, they dont have the luxury to think about their credit card balances or the bills they have to pay. By the time they return home, theyre faced with a huge pile of debt. Below, we’ll talk about what are the best debt consolidation for veterans.
Veterans have different financial circumstances. Some manage their debt and expenses well while others struggle to solve their financial problems. Fortunately, a veteran drowning in debt has options for debt relief, including a debt consolidation loan.
In this article
Average Interest Rates For Credit Cards
On the other hand, a mortgage is secured, installment debt. Interest rates tend to be low 30-year loans averaging around 3.92% as of July 2017 according to Freddie Mac. And mortgage balances are amortized for a specific term, meaning that you will know exactly how long it will take to pay off the loan in full.
Debt Relief For Military Spouses
There are debt relief options available for spouses of military members. TheServicemembers Civil Relief Act allows spouses of active-duty military members to suspend their education and other legal obligations.The SCRA also requires debt collectors to get court approval before trying a civil case against a military spouse or taking any action that would seize the service members assets.
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Eligibility Is Still Possible Despite A Bad Credit History
Speaking of which, since your credit score is one of the measures lenders go by during approval, you may be hesitant to even bother applying if your credit score is less than stellar. Dont be. At Omni Financial, we dont use a single metric for every person that applies, whether for a debt consolidation loan or basic personal loan. We examine each application individually and in context with other factors that may be relevant to your unique situation. After all, each borrower is an individual, so it only makes sense for us to apply the same principle to approval.
From debt relief to flexibility, as you have seen in the sections above, the variety of advantages that derive from debt consolidation loans are voluminous. You may wonder, however, if there are any disadvantages. In the spirit of full disclosure, there are a handful, depending on what your situation is in terms of finances. In summary however, the main drawback is apparent when a consolidation is completed then a balance is run back up again with the debt one may have had, making the financial situation back where it originally was or much worse.
Balance Transfer Credit Cards
If you are carrying high-interest credit card debt you can consider consolidating debt with a balance transfer card instead of a military debt consolidation loan. Many of these cards have extended zero-interest periods. You can transfer your balances to the new card and pay it off with no interest.
You will need good credit to get approved for these cards, and youll have to pay the debts off before the zero-interest period is up, or youll be back to paying high interest rates.
Many credit card issuers offer special deals to active duty service members, including fee waivers and lower interest rates on some balances. Inquire with your card issuer. Its also worth looking into balance transfer cards issued by military credit unions like the Pentagon Federal Credit Union , Navy Federal Credit Union and Air Force Federal Credit Union.
Always check several offers before choosing a balance transfer card. Terms can vary widely.
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Here Are The Best Personal Loan Options For Servicemembers Looking To Consolidate Their Debt
- USAA: Loan amounts range from $2,500 to $5,000 over 12 to 48 months, with no origination fee. APRs from 7.24% to 17.65%.
- Navy Federal Credit Union: Loan amounts range from $250 to $50,000 for up to 60 months, with no origination fee. APRs from 7.49% to 18%.
- Pentagon Federal Credit Union: Loan amounts range from $600 to $20,000 over 36 to 60 months, with no origination fee. APRs from 6.49% to 17.99%.
Best Personal Loans For Veterans & Military Members With Bad Credit
- Receive funds by the next business day, if approved
- 0.25% discount when you enroll in autopay
- No origination fee or prepayment penalty
- Must have a Wells Fargo checking account to receive 0.25% discount
- New Wells Fargo customers will need to visit a branch to apply
- No option to prequalify
Eligibility: Wells Fargo personal loans are available for both existing and non-existing Wells Fargo customers. Existing customers can apply online, while new customers must visit a branch location. Although Wells Fargo doesnt have a minimum credit score requirement, its a good rule of thumb to maintain a score of at least 670 to increase your chances of receiving a low personal loan rate.
Loan uses: You can use Wells Fargo personal loans for any type of purchase besides a home and higher education. For example, you can consolidate your debt, finance purchases like new appliances or furniture, fund renovations and cover expenses, such as medical bills and auto repairs.
Turnaround time: Wells Fargo offers a simple and quick application process for existing customers. If you submit an application online, youll receive an instant approval response. Once approved, you can typically receive your funds by the next business day.
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Debt Factors Affecting Veterans
As with civilian consumers, veterans can see household spending and living costs add up over time. Additionally, certain debt difficulties are unique to military service members and veterans. Constant relocation and spousal unemployment can increase the risk of military service members falling into debt.
In fact, its estimated that 36% of military families have problems meeting their financial obligations. These financial burdens often continue after the military services are completed.
If you served in the armed forces and youre carrying a heavy debt burden, dont overlook the potential solutions for debt relief. Some of the best debt consolidation for veterans can be accessed through VA loans and other programs. Since the VA guarantees up to 25% of the loan, lenders are willing to offer more favorable payment terms for veterans.
Va Cash Out Depends On Home Equity
In order to use VA cash out loan for debt consolidation, the conditions have to be right. Equity is the first requirement. Your ability to pay is also important. If you have enough equity in your home and you can meet the financial requirements for the new loan, this type of debt consolidation may be a great option for you.
Home values in many areas are on the rise. Many homeowners have discovered a surprising amount of equity currently at their fingertips for reducing or completely eliminating high-interest debt.
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Penfed Credit Union Personal Loan
Est. APR
Loan Payment Example: A $50,000 personal loan financed at 5.49% APR would amount to 60 monthly payments of approximately $954.83 each.
Min. credit score
None
Key facts
PenFeds personal loans are ideal for good-credit borrowers looking for a personal loan at a low interest rate.
Pros
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Soft credit check with pre-qualification.
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No origination or prepayment fees.
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Offers joint and secured loan options.
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Offers mobile app to manage your loan.
Cons
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Does not offer direct payment to creditors with debt consolidation loans.
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No option to choose or change your payment date.
Qualifications
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Minimum credit history: Two years.
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Debt-to-income ratio: Below 55%.
25 months to 5 years
Fees
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Membership fee: $5
Disclaimer
Est. APR
This APR includes an autopay discount.
Loan amount
None
Key facts
If youre a USAA member with good credit, you could get a personal loan that can be funded in one business day.
Pros
-
No origination or prepayment fee.
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Rate discount for autopay.
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Must be a USAA member.
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No option to pre-qualify.
Qualifications
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USAA does not publicly disclose many of its borrower requirements. Borrowers with good and excellent credit scores will likely qualify for the lowest rates.
Available Term Lengths
If You Dont Have Equity An Mdcl Wont Work
The VA provides definite benefits when you apply for financing, but it cant help you if the money is not there. Like any home equity loan, an MDCL only allows you to borrow against the equity available in your home. If you have no equity, theres nothing to borrow against.
So if your homes value is not significantly higher than the remaining balance on your VA home loan, then an MDCL will not be a viable option. Its also out of the question if youre upside on your mortgage where the property value in your home drops below the remaining balance on your mortgage.
You need significant equity in your home for an MDCL to be the right option for consolidation. Even if you have some equity, you need to make sure its enough to work for what you need. For instance, if you have $80,000 left on your mortgage and the home is worth $100,000 that would net you $20,000 for consolidation. However, if you have $35,000 in to pay off, that amount is not enough to serve the purpose you need it to serve.
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Some Loans Are Riskier Than Others
You may be tempted to use nontraditional means, like a payday loan or a pawnshop, to help you pay your bills. You wouldnt be alone: According to a 2012 survey, 35 percent of military members use these types of services. But you may want to tread carefully. While you were on active duty, the Military Lending Act capped the rates many lenders were allowed to charge at 36 percent. As a veteran, that protection does not apply, and you could be charged as much as 100, or even 500, percent. Those high rates make these types of loans extremely difficult to pay back. That means its more important than ever to understand the terms of your loan.
Tip: Before turning to one of these loans to pay off bills, you may want to try other optionslike talking to your creditors about repayment plans or extensions, or meeting with a credit counselor.
Look Into A Savings Deposit Program
Service Members who receive Hostile Fire Pay/Imminent Danger Pay can enroll in a Savings Deposit Program. A Savings Deposit Program is a special savings account that earns ten percent interest. This is a much higher savings interest rate than you will get opening a regular savings account at any bank or credit union. Your debts interest is capped at six percent while youre deployed, so one of your options is to only put money toward the SDP and make a large payment toward your debt when you get back.
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Does The Va Offer Personal Loans
The Veterans Affairs does not offer personal loans. VA loans give military service members and veterans the ability to purchase a home. Militarybenefits.info also states, You cannot buy a home with a VA loan, apply for more money than you need to purchase and close the deal and take the remainder in cash. This means there isnt a loophole for using VA loan money to finance personal expenses, as you would with a traditional personal loan.
Personal Loans And Debt Consolidation Loans
Personal loans are often used for renovating your home or covering unexpected expenses. A debt consolidation loan is a type of personal loanits used to pay off several debts, streamlining your monthly payments into one fixed amount. Both types of loans offer lower interest rates compared to credit cards. So, which should you choose, and whats the difference?
The main difference between the two is the purpose of the loanwhether its for debt consolidation or personal expenses. With a debt consolidation loan, the requested loan amount is based on the existing loan balances youre looking to consolidate. The funds you receive from the loan will go toward paying off those debts.
When you borrow money with a personal loan, the financial institution may be able to deposit the funds right into your checking or savings account. You may choose to spend them on personal expenses, pay off other debt or a combination of both.
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What Is The Gi Bill
The GI bill, originally passed in 1944, allows veterans to receive higher education or vocational training for free, or nearly free. Veterans must choose which program to use in order to optimize their benefits, and options include:
- The Yellow Ribbon Program, intended to help with the cost of private school tuition and offered at more than 1,800 colleges in the U.S.
- Post-9/11 GI Bill, which applies to individuals with active duty service on or after September 11, 2001
Military & Veteran Consolidation Loan Options
MDCLs are typically used to pay off credit cards and other high-interest debts. Home loans have much lower interest rates, and VA rates are even lower than average consumers can get.
At the end of 2021, the average rate for a 30-year fixed mortgage was 2.72%. It was 2.99% for a conventional mortgage.
Consider that the average credit card interest rate was 17%, and that an MDCL can be paid off over 15, 20 or 30 years. That could significantly reduce your monthly debt burden.
There are other debt consolidation options to consider. As always, they have pros and cons.
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Debt Help For Military Spouses
Spouses of active members of the military can get help paying their bills and other debt relief under the SCRA. As mentioned above, the law caps credit card and mortgage interest rates while on active duty and provides protections against eviction and foreclosure. In addition, there are health and life insurance benefits, housing benefits and tax deductions for students who are military spouses.
As found in a 2020 Military Lifestyle survey by Blue Star Families and the Institute for Veterans and Military Families, families of veterans and active-duty service members face challenges, both financial and otherwise. The most common contributors to financial stress for active-duty family respondents who indicated some financial stress are unemployment and underemployment student loans and out-of-pocket relocation costs.
- 77% of active-duty family respondents who have out-of-pocket housing costs spend more than $200 a month more than their Basic Allowance for Housing allotment.
- 20% of active-duty spouses are unemployed and actively seeking employment. 67% of employed active-duty spouses report they are underemployed.
- 67% of active-duty spouses earned less than $20,000 in 2019 40% earned no income at all in 2019.
- 28% of active-duty family respondents report that “military pay” is one of their top five issues.
- 14% of enlisted active-duty family respondents reported low or very low food security.
Paying Off Medical School Debt Can Be Difficult But Federal And State Programs Provide Loan Forgiveness And Repayment Options
Several student loan forgiveness options exist to help medical professionals tackle large loan balances. Learn how they work.
A career in healthcare is lucrative and fulfilling, but the cost of getting the education needed to practice in your chosen field can be steep. About 73% of medical students graduate with debt, and the average debt balance in 2019 was $200,000, according to the Association of American Medical Colleges.
If youre a medical professional trying to chip away at high loan balances, loan forgiveness and repayment programs could help you pay off your debt faster.
Heres how student loan forgiveness and loan repayment programs work, as well as some loan forgiveness alternatives.
Refinancing your medical school debt is also an option. Visit Credible to learn more about student loan refinancing and compare rates from multiple private student loan lenders.
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Veterans Start Getting Out Of Debt Today Easy Guide
While debt consolidation is available for people of all ages and backgrounds, the best debt consolidation for veterans can be accessed through programs designed with military personnel in mind. Whether the bills piled up while you were deployed, or it was challenging to find employment when your military service was done debt consolidation might be a good option to consider.
Debt Consolidation Loans For Veterans
Veterans have a few options when it comes to consolidating debt as well. The first option applies only to Veterans who own their home with a VA home loan. If you went through the VA to get a mortgage you are eligible to use a Military Debt Consolidation Loan. This is a loan borrower against the equity built up in your home, so its like a home equity loan specifically meant for Veterans.
As a Veteran, you face some unique financial challenges in establishing a stable outlook once you transition to civilian life. Making that transition can be tough, but there are also specialized tools available to Veterans who are working to overcome those challenges to achieve stability.
The information below is designed to help you understand what a Military Debt Consolidation Loan is, how it can help you, and the risks you need to know before you decide to use it. If you have a question or need expert advice on your best option for debt relief, we can help. Call Consolidated Credit today at to request a free debt and budget analysis from a certified credit counselor.
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Got Bills Use A Va Refinance To Consolidate Debt
If you have equity in your home and youre eligible for home loan benefits, you may be able to get a VA cash-out refinance loan to pay down debt.
Have bills become a contentious topic in your home? Maybe you used a rewards card for the free airline miles and now your payments are sky high. Or maybe you didnt have enough cash for a hospital visit, and now youre sick of getting the monthly bill. Your monthly payments are rapidly taking over your life and you need some relief.
An accumulation of too much revolving debt can happen to the best of us. Luckily, homeowners have an advantage. If you own a home, and youre eligible for VA home loan benefits, a VA refinance loan with a low interest rate may be a great way to consolidate your debt.