Financing a car purchase can be costly. However, if you’re a military member who’s in the market for a car loan, you may be able to secure lower interest rates and other benefits thanks to your military status.
Below, CNBC Select rounded up the best military car loans. We ranked them based on repayment terms offered, loan amounts and other factors (see our methodology below). Read on to learn more about the lenders we’ve reviewed to see if they’re the right solution for you.
Best for larger loan amounts
PenFed Auto Loans
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Annual Percentage Rate (APR)
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Loan purpose
New vehicles, used vehicles, refinancing
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Loan amounts
Loan amount can depend on loan terms selected; maximum loan amount is $150,000
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Terms
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Credit needed
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Early payoff penalty
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Late fee
20% of the overdue amount, up to $25
Pros
- Loan amounts start at $500
- No early payoff fees
- Prequalification available
- Cash incentives through car-buying service
- Co-borrowers allowed
Cons
- Credit union membership required
- Late payments subject to fees
Who’s this for? Someone who wants a loan that can cover the cost of the car and all the expenses. PenFed Credit Union offers auto loan amounts as high as $150,000. By contrast, many other lenders offer loans of up to $100,000, or they don’t disclose their maximum funding amount so you’ll have to begin the application process in order to get a customized offer. PenFed will approve financing up to 125% of your purchased car’s value (up to the $150,000 limit). This gives you more wiggle room in your budget to cover fees and other incidental expenses that come with purchasing a new set of wheels.
Standout benefits: You can get pre-approved for a loan online in just a few minutes.
Best for long repayment terms
Who’s this for? If you need more time to pay back your loan, look to this lender. Navy Federal Credit Union offers repayment terms as long as 96 months — the longest of any lender on this list. Most other lenders offer terms of up to 84 months. While 96 months may not seem like drastically more time, an additional year can make a big difference when it comes to your monthly payment.
Standout benefits: This lender offers pre-approvals that are good for up to 90 calendar days. Most other lenders have pre-approvals that expire after 45 to 60 days.
Best for purchasing an older car
USAA Auto Loans
USAA Federal Savings Bank is a Member FDIC
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Annual Percentage Rate (APR)
Rates start at 4.89% but can depend on the loan type
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Loan purpose
New vehicles, used vehicles and older vehicles
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Loan amounts
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Terms
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Credit needed
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Early payoff penalty
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Late fee
Pros
- Offers loans specifically for older car purchases
- Offers terms as long as 84 months
- Offers 0.25% rate discount when you sign up for autopay
Cons
- Car loans for older cars are not eligible for terms as long as 84 months; instead, you’ll get a maximum term of up to 72 months
Who’s this for? For someone who doesn’t mind an older car, USAA, a financial services company geared toward military members, allows borrowers to apply for loans specifically meant for purchasing older cars. USAA defines “older cars” as models manufactured in 2017 or earlier, whereas “used cars” are defined as preowned autos manufactured after 2018. It can sometimes be tough to find financing for an older car because these vehicles may be more prone to mechanical issues from wear and tear and have a lower resale value, which among other factors, can make older vehicle financing riskier in the eyes of lenders. USAA offers loan terms that range from 36 to 72 months for older vehicles.
Standout benefits: USAA offers borrowers a 0.25% autopay discount.
Best for refinancing
Service Credit Union Auto Loans
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Annual Percentage Rate (APR)
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Loan purpose
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Loan amounts
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Terms
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Credit needed
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Early payoff penalty
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Late fee
Pros
- Offers loans for refinancing
- Offers terms as long as 84 months
- Skip-A-Pay offered, though you will incur a $35 fee for each payment you skip
- Can submit an application online, over the phone or in-person
- Offers up to a 0.75% rate reduction with direct deposit set up to a Service Credit Union checking account
Cons
- Doesn’t disclose all fees on their website
Who’s this for? Looking to refinance your car? Service Credit Union offers solid auto loans for refinancing an existing loan. Snagging a lower interest rate when you refinance your loan could mean lower monthly payments, which may save you money. The refinance loan rates at Service Credit Union start at a fairly low 4.99%.
Standout benefits: You can use the car loan calculator on Service Credit Union’s website to estimate what your monthly payment might be.
More on our picks for best military car loans
PenFed Credit Union
PenFed Credit Union is known for offering a wide array of financial products including auto loans, mortgages, personal loans and more. However, only members of the credit union can receive funding. PenFed is open to anyone — not just military members. You can join PenFed by submitting an application to open one of its savings accounts and depositing a minimum of $5.
Loan amounts
Up to $150,000
Navy Federal Credit Union
Navy Federal Credit Union was founded during the Great Depression and exclusively serves military members, veterans and their family members. Navy Federal Credit Union is a not-for-profit credit union so members get to see benefits such as lower interest rates, lower fees and even dividends.
Loan amounts
Minimum of $30,000
USAA
USAA has been around for over 100 years and offers financial services and resources to active and retired military members and their families. Membership is free, but there are some eligibility requirements involved. You can check your eligibility by answering a few questions about your experience and associations with the military and U.S. Federal Agencies.
Loan amounts
Minimum of $5,000
Service Credit Union
Service Credit Union was founded in 1957 and has since expanded to over 50 in-person locations across the U.S. and Germany. It’s a not-for-profit credit union so it’s able to offer members lower interest rates on loans and fewer fees.
Loan amounts
Not disclosed
How do you qualify for a military car loan?
To qualify for a military car loan, you’ll need to be an active duty military member or veteran, and you must show proof of your service. This could be through a military ID or a Certificate of Release or other form of discharge documentation if you’re a veteran.
If you’re applying for a military car loan through a military-focused credit union, it’s likely you’ll first need to join the credit union as a member. Membership procedures vary depending on the credit union.
Do military family members qualify for a military car loan?
There are some limits when it comes to determining which family members qualify for a military car loan. Typically, spouses can qualify but other relatives can be somewhat of a gray area. If you’re the parent, sibling, or another relative of a member of the military, you’ll want to double-check with your lender to see if you’re eligible under its requirements.
Are there benefits to getting a military car loan?
Specific perks or benefits will depend on the lender, but a military car loan often comes with lower rates and other favorable terms. Some lenders may even throw in a discount on auto insurance.
Military status can also provide certain legal protections on your car loan thanks to the Servicemembers Civil Relief Act. This act allows service members to end their auto lease early without penalty. It also prevents service members from getting their car repossessed without a court order.
FAQs
What is the interest rate on military car loans?
Interest rates can vary depending on the lender. Lenders may also offer an interest rate reduction to military members.
What are military car loans?
Military car loans are auto loans meant specifically for active-duty military members and veterans. They often come with lower fees and lower interest rates.
Is a military car loan worth it?
If you need to finance a vehicle purchase and you’re affiliated with the military, you should at least consider lenders offering military car loans. This allows you to save more money and qualify for some favorable terms and protections.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best military car loans.
Our methodology
To determine the best military car loans, CNBC Select analyzed several car loan providers.
When narrowing down and ranking the best car loans, we focused on the following features:
- Flexible minimum and maximum loan amounts/terms: Each lender provides a range of loan amounts and terms that can cater to a variety of needs.
- Pre-qualification: Each lender offers pre-qualification which doesn’t trigger a hard inquiry and allows you to get estimated loan terms before applying.
- Online user experience: The lenders on our list make it easy to complete most of or the entire financing process online.
- No early payoff penalties: We prioritized lenders that don’t charge borrowers for paying off loans early, but noted if such fees are not disclosed on the lender’s website.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging.
The rates and fee structures advertised for military car loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
