by Christine Yaged
The financial state of the average American has been a hot research topic for several years, with studies focused on how well-off typically households are across the nation. The results have been bleak consistently, with a widely noted survey highlighting the reality that nearly 40% of people felt they couldn’t cover a $400 emergency easily.
However, a shift has taken place in the past year, with new data pointing to a rosier state of affairs. The average savings account balance is slightly more than $16,000, which shows signs of improvement in the personal finance realm. However, for the Veteran community, these figures do not likely tell the entire story.
Across Veteran households, financial well-being tops the list of concerns. According to the Institute for Veterans and Military Families and its 2017 Military Lifestyle Survey, 49% of veterans and military families have less than $5,000 set aside for a rainy day. Adding to this financial strain is the reality of job prospects, not only for veterans but for their family members as well.
While unemployment rates across the nation are historically low, veterans feel underemployed, as do their spouses. The combination of minimal savings and a frustrated employment scene means many veterans don’t have enough to cover unexpected expenses on the fly.
Personal loans can be a helpful financial tool when financial emergencies arise. Securing a personal loan allows you to receive a lump sum payment to cover a surprise bill, a home or car repair, or consolidate high-interest debt. You repay the balance of the loan, plus interest, over time, instead of scrambling for all the cash up front. Personal loans are available from a variety of sources, and veterans have tailored options designed specifically to meet their unique needs.
Here are six personal loans for veterans to consider if you are in need of some financial assistance.
Bad Credit Personal Loans
You may think getting a personal loan is impossible if your credit is less than perfect, but that is far from the truth. There are several veteran-friendly lenders, most of which operate online, that can provide options for bad credit personal loans to veterans. These lenders evaluate your income and other factors not necessarily related to your credit history or score to determine your eligibility. In many cases, veterans can be approved for funding up to $35,000 in as little as a few days.
Bad credit personal loans require some reading of the fine print, as interest rates offered reflect the higher risk a lender takes on in the process. Although veterans are legally protected through interest rate caps set by the government, the maximum rate you could pay might still range from 19% to 35%. You will likely pay more in interest or fees than if your credit was strong, so be sure to consider this before signing on the dotted line.
Military-focused Banks and Credit Union Loans
One of the best options for veterans in need of a personal loan is a military-focused bank or credit union. Several financial institutions cater directly to the veteran community, some serving millions of members and customers each year.
These banks and credit unions, including USAA and Navy Federal Credit Union, offer personal loans to veterans that do not require collateral. This means you don’t have a need to back the loan with savings or another asset; instead, you can qualify based on your credit history and income alone. Because there is no collateral involved, you do need to have a solid financial track record to be eligible.
The benefits of working with a military-focused financial institution are many. These banks and credit unions understand your often unique financial circumstances, which helps get you through the loan approval process.
Also, you are likely to pay a lower interest rate and loan fees compared to an alternative lender. Personal loans from military banks and credit unions may also come with more flexible repayment terms, based on how much you borrow and the strength of your application.
Unsecured Personal Loans from Online Lenders
Veterans also have options through several new entrants to the lending market. Online lenders, sometimes referred to as marketplace lenders, offer unsecured personal loans to veterans who have fair to good credit. These loan options fall in between bad credit personal loans and bank or credit union loans as far as the interest rates offered and the repayment terms available.
The main difference here is that the application process is completed online through a relatively easy process. Online lenders may not have special loan terms for veterans specifically, but they are worth checking out to see what options are available.
Debt Consolidation Loans
If the reason for wanting or needing a personal loan is debt consolidation, you have a handful of options from both conventional lenders and online providers. Debt consolidation loans for veterans allow you to take out a new, single loan to cover multiple debts owed, such as credit cards or other personal loans. With this strategy, you pay off the debts you owe with the loan proceeds and then repay the new loan balance over time.
This has the potential to lower your total cost of debt with the help of a lower interest rate, or extend your repayment term to make monthly payments easier on your budget.
Debt consolidation loans have similar interest rates as personal unsecured loans for veterans, ranging from 9 to 15% on average. You do need fair to strong credit to qualify as well as a steady income. Both banks and online lenders offer debt consolidation loans, but be sure to comparison shop before selecting the option that is best fit for you.
VA Home Loan Options
While not technically a personal loan, veterans have options for borrowing money at an affordable rate through VA home loans. If you are in need of cash for a home purchase, or you are a current homeowner with home repair or renovation needs, a VA home loan may make the most sense. As a veteran, you are not required to put down a significant amount to qualify for the loan, and in some cases, you may not owe lender’s fees as part of the process.
VA home loans are available from many different lenders, most of which provide solutions for prospective or current homeowners through a new loan or a refinanced loan. With a refinanced VA home loan, you may have the option to draw out some of the equity in your home to use for other purposes, like debt consolidation or covering a large expense. This can be a cost-effective alternative to a veterans personal loan.
Veteran Personal Loans for Business Owners
Finally, veterans who are also business owners have unique options for personal loans through select lenders. Veterans who own a business that has been in operation for at least one year can qualify for an unsecured business loan that can be used to help cover personal expenses if necessary.
A business loan may be available in higher amounts than a conventional personal loan, although the interest rate ranges are similar. Veterans who are also business owners should evaluate their options for personal loans first, and then compare those to what may be available to the business as an alternative solution.
Veterans have many options when it comes to getting personal loans to help cover life’s unexpected or significant expenses. Whether it is debt consolidation, home repair bills, or financing a major purchase, see what personal loans you may qualify for through traditional or online lenders that cater to military members first.
About Author: Christine Yaged is a co-founding partner and Chief Product Officer of FinanceBuzz. Christine launches and scales brands. She is passionate about technology, digital marketing, and people.