Getting a Military Car Loan

Military car loans are difficult to obtain because many service men and women have poor credit histories. There are a number of factors that make it difficult to have good credit while serving in the armed forces. These include lack of credit history, the tendency for loans to go into delinquency and lack of a permanent address. To get a car loan, you need to work with a lender who understands your unique circumstances. 

Overcoming a Short Credit History

When you are serving in the military, you will be required to take out loans. In fact, even student debt may be negated or partially forgiven after military service. It is unnecessary to have a credit card when your living expenses are covered and you do not need to do any additional shopping. Student debt and credit cards are the first two credit lines most persons open in their lifetime. Without these two items to bolster credit before seeking a car loan, you will have little to show a lender to prove you can perform on a loan. You may overcome this by working with a lender who understands the situation you face in the military. You may also seek loan programs specifically geared to men and women of service; many car dealers will offer these loans like they do recent graduate loans. Interest rates will be higher, but these loans are meant to help you build credit.

Explaining Delinquencies

Serving in the military, either at home or abroad, means you may be difficult to reach or lose touch with necessary items at home. When a debt comes due, such as an electric bill or credit card payment, the collections notice may never reach you. It is common for these debts to carry on for years, even if the amounts are small. In the end, you will be facing a significant drop in credit score over a potentially small delinquency.

First, you should verify the debt has not passed the statute of limitations. If it has, you can have it removed from your credit score. You may also attempt to file a dispute on the drop in credit if you believe the report is inaccurate. Finally, consider attaching a statement about the debt to your credit score. This will allow you to explain the debt was incurred while you were out of the country in service.

Assuring Against Default

When you do not have a permanent address, there is little assurance against default. Lenders will determine they will be unable to collect from you or seize your automobile if you miss payments. You will need to protect against this by giving them sufficient information regarding when and where the car will be used and who they can reach if there is a problem with your account. Having a spouse or family member who is not in the military cosign on the loan is often a good solution. The lender can then contact this civilian at his or her registered address if your loan goes into delinquency.