The military loan
Military loans are becoming popular with consumers. In the recession, many people are struggling to make bill payments on time and are looking for funding options. Because of the banking industry’s issues, traditional lending is not always an option. In particular, with Obama’s restructure of the lending industry, more banks are putting off lending to consumers. This puts the consumer in a difficult spot. They still have bills to be paid, and have a lack of cash to make payments.
Military loans are an option for non-civilians. There are different qualifications, but the three main ones are
- GS-6 or higher designation
- Retirement from the military after 20 or more years of service
- Currently on active duty or working full-time active personnel on reserve
Any one of these three requirements usually will qualify a military person to apply for a loan.
Repayment
Repayment of military loans is also simple. Payments are deducted from paychecks in fixed amounts. If a person qualified for this type of loan, the repayment structure is in place, so remembering to make payments is unnecessary.
Risk minimized
Military personnel are paid by direct deposit. Armed Force workers automatically have steady income, so the risk to a lender is minimized. It’s simple to apply online and have an answer as to whether or not the applicant meets qualifications, within minutes. With auto-repayment set up for qualified borrowers, there is no added risk. These are some of the simplest loans to use when a military worker needs funding.
Part of the reasoning behind high interest rates is that traditional lenders are trying to protect themselves from customers who may not make payments, or make payments on time. To mitigate their risk, they build safeguards into the loan, such as late fees, interest rate hikes and processing fees. With military loans, repayment is automatic so these safeguards are not needed.
Interest rates
The other advantage of a military loan is its reasonable interest rate. While the banking industry is still reeling from the recession’s aftermath, military loan companies are impervious. Consumers who try to get bank loans still have to work with difficult applications and high interest rates.
Terms
Military loans are also short term loans and that saves the qualified customer from many charges a normal loan would incur. Normally, the longer a loan, the more interest fees a borrower will end up paying. For example, on a $100,000 home loan, at 7% interest for 30 years, a consumer will end up paying more than $139,000 in interest fees alone. It’s the amount of time that increases the ending interest payments. Military loans, on the other hand, normally last for a few weeks, thus cutting out any enormous interest fees that accumulate over time.
Military loans a viable option
If a person meets the criteria, military loans are a convenient and quick option for them to pay emergency bills. These types of loans are simple to apply for and their lifespan is short enough to actually benefit both the lender and the borrower. In the end, they provide the necessary funding to qualified customers, and give them piece of mind when it comes to their finances.
