There is a school of thought that should a loan applicant have a very poor credit rating, the chances of getting approved are pretty low. The fact is that it depends almost completely on which lender is approached and which loan is applied for. For members of the military, seeking a military loan with bad credit is best done through military lenders.

Like all applicants, military personnel have a choice of lenders to approach. But while they often benefit from even traditional lenders, the terms that are offered are not always the best. While there is no such thing as guaranteed loan approval, it is more likely to get the green light when sticking to specialist lenders.

But what are the advantages of seeking a military loan rather than a normal civilian loan? And who can actually qualify for these loans?

Qualifying for a Military Loan

There can be no prizes for guessing that military members qualify for military loans, with bad credit often a feature that can be ignored anyway. But more than active service men and women can apply. Veterans are also entitled to apply, while immediately family members (wife, husband) can too.

The theory that these applicants are practically guaranteed loan approval is understandable. As an employee of the US government, there is a high degree of job security and a clear certainty of income – the employer is not about to go bankrupt. However, there are criteria to satisfy too, and nothing is free.

The fact that there is such strong employment security means that the terms are typically very good too. This makes the military loan, especially for bad credit borrowers, a very affordable option – much more so than those available from traditional civilian lenders.

Advantages of Active Duty

There are discounts offered to military personnel, but the biggest incentive is clearly available to those who go on active duty. Normally, getting military loans with bad credit from a recognized military lender means securing interest rates of as little as 9% on a loan.

But under the terms of the Soldiers and Sailors Relief Act, anyone serving in the military and is on active duty is entitled to a further discount on interest rates for the period of time spent on duty. As much as 6% can be taken off the interest rate charged, which effectively lowers the rate to just 3%. After near-guaranteed loan approval, this is a hugely attractive element of the deal.

However, this interest reduction is an entitlement on any loan, not just recognized military loans. So, even a civilian loan secured by a military service person can be reduced, thus making the loan deal the best imaginable.

Typical Terms to Expect

For anyone seeking a military loan with bad credit, the single greatest attraction to the loan is the high possibility of approval. But there are other aspects to the loan that should be considered too. Not least is the fact that the interest charged is pretty low, mainly because the credit score of the applicant is ignored.

The reason that it is ignored is that lenders are given the strongest guarantee they will receive repayments every month. The US government removes the required repayment as a deduction from income and directs it to the lender. So, even if the borrower wanted to, he could not default on the loan.

There is no such thing as guaranteed loan approval, but lenders find it very hard to reject military personnel thanks to their special circumstances. Even for retired military members, the benefits remain. So, getting a military loan is almost a certainty.


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