Debt Consolidation for Military and Veterans
Being weighed down by financial debts is the last thing you want when trying to balance your normal life and military service. Sadly, most servicemen/women in the US face lots of financial difficulties and are unable to service their debts.
Veterans, on the other hand, find it hard transitioning to civilian life with financial burdens. With possibly low pay and huge bills, adding multiple loan repayments to this list makes the situation almost impossible to salvage.
If you belong to any of the two groups above, then consolidation can do you some good. In this write-up, we’ll explore everything about debt consolidation for military and veterans and pick out the top lenders in the industry.
- Est APR
- Min Credit score
- Amount
LendingPoint
- 15.49 - 35.49%
- 600
- $2,000 - $25,000
Avant
- 9.95 - 35.99%
- 550
- $2,000 - $20,001
OneMain Financial
- 18.00 - 35.99%
- None
- $1,500 - $20,000
- Est APR
- Min Credit score
- Amount
Navy Federal Credit Union
- 7.49 - 18.00%
- None
- $250 - $50,000
USAA Personal Loan
- 6.99 - 17.65%
- None
- $2,500 - $20,000
PenFed Credit Union
- 6.49 - 17.99%
- 700
- $500 - $20,000
- APR range
- Fees
- Terms
- Amounth
- Unemployment protection
Bank 1
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 2
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 3
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Table of Contents
How Debt Consolidation for Military and Veterans works?
Consolidation lets you repay multiple debts at once, leaving you with a single loan with fixed monthly repayment and a lower interest rate. Common debts that can be consolidated include personal loans, credit card debts, medical bills, and mortgages.
The main aim of debt consolidation is to make repayment cheaper, and faster. Therefore, borrowers strive to find lenders with the lowest rates.
Military and veterans’ debt consolidation loans also work the same way. A lender repays all their existing debts and replaces them with a new cheaper one. However, they can also explore credit card balance transfers.
Such comes with an introductory offer of 0% interest charged. That could have you paying up to 17.3% APR. If anything, that only means faster debt repayment.
Please note that for debt consolidation loans for mortgage refinancing, only veterans and servicemen with VA home loans are eligible.
Such makes them eligible for cash payouts. However, the home appraised must be of a higher value than the loan you anticipate to take. You’ll, however, part with closing costs, some of which could be high.
Credit card consolidation, though crucial, is highly risky, and could have you losing your home or any valuable asset for that matter. You, therefore, want to analyze your options before you make the final decision.
Consolidation lets you repay multiple debts at once, leaving you with a single loan with fixed monthly repayment and a lower interest rate.
The main aim of debt consolidation is to make repayment cheaper, and faster. Therefore, borrowers strive to find lenders with the lowest rates.
Common debts that can be consolidated include personal loans, credit card debts, medical bills, and mortgages.
Tips for getting a debt consolidation
The following are some of the tips active military members and veterans can explore to get debt consolidation;
- Go for reduced interest rates – consolidation mainly aims to help you repay your loan cheaply and faster. Reduced interests will have you paying a lower amount than what you would if you made direct payments to lenders.
- Freeze credit accounts when in active service – a new credit card during deployment will only worry you more. Instead, make it a habit for your family to be using available cash when you are deployed
- Pay your debts in a lump sum – If you can, pay off all your debts with a single repayment. Doing so could set you up with multiple offers from your lenders. Plus, you’ll also grow your credit score faster.
- Go for consolidation before deployment – with the reduced repayment and other advantages that come with consolidation, consolidating before deployment reduce your worries hence giving you room to concentrate fully on the mission
Pros and cons
| Pros | Cons |
|---|---|
|
Low-interest rates – consolidation loans generally carry lower interest rates. This is owed to the fact that a borrower pays all his/her owed debts at once, leading to good reports to credit agencies by previous lenders. Plus taking a new loan means an increase in credit utilization ratio – a sign most credit agencies are keen on when assigning credit scoresLow-interest rates – consolidation loans generally carry lower interest rates. This is owed to the fact that a borrower pays all his/her owed debts at once, leading to good reports to credit agencies by previous lenders. Plus taking a new loan means an increase in credit utilization ratio – a sign most credit agencies are keen on when assigning credit scores |
Long repayment terms are the norm in debt consolidation. Extended repayment terms, though might seem cheaper at first, proves expensive in the long run. Repaying your loan longer than you were supposed to will mean paying even more interests |
|
Brings all debts under one roof – consolidation integrates all debts into a single loan with a single monthly repayment. That makes consolidation loans cheaper. Plus, borrowers can stay organized, hardly missing out on any repayments. This is even better for veterans who are keeping up with financial struggles when transitioning into civilian life |
Consolidation, though good for borrowers trying to get back on their feet, is not the remedy for financial indiscipline. If a borrower takes advantage of the fact that her/she can qualify for more loans and borrows irresponsibly, they’ll have their credit profiles even more |
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Low credit requirement - you don’t need an excellent credit score to qualify for consolidation loans. lenders such as OneMain Financial, Navy Federal, and USAA will approve loans for even lenders with the lowest scores. However, having a good credit score will definitely give you an upper hand and set you up for lower interests and flexible repayment terms |
Secured consolidation loans are risky – you risk losing your home or any valuable asset offered as security should you go against the lender agreement |
|
Longer repayment terms – debt consolidation loans for military and veterans have repayment terms of up to 30 years, and more depending on the lender in question. Longer terms mean lower monthly repayments hence affordable |
|
Requirements to qualify
Different lenders have different requirements spelled out on their terms of services, and qualification for consolidation is subject to meeting these requirements. However, some are universal to all lenders, even required by law.
For instance, you must be 18 years and above to qualify for consolidation. Most lenders even cap it at 20 years and above. You must also be a legal resident of the United States.
To verify this, your lender will need a copy of any of your legal documents including ID and passport.
The next stop a lender makes would be on your credit profile. Most lenders, however, are not strict on this. But, if you can maintain yours at a higher score, you should do so. A score of 650 and above will come in handy when negotiating rates and terms.
Your credit history is also an area of interest for most lenders. How you behaved with past loans shows a lender how you’ll likely behave with their loan.
Please note that these loans are only preserved for active servicemen/women and veterans hence the name.
Before approaching a lender, consider prequalification. This will help you know your potential lenders, your anticipated monthly repayment terms, and interest rates.
Take time to vet different lenders, all while trying to find one that conforms to your financial goals. When you do, submit a formal application.
For even better terms, you can consider adding a cosigner. Alternatively, you could also use your house, car, or any valuable asset as security for your new loan.
A form of identification can be your driver’s license. Sometimes, your Social Security number is enough.
Military and veterans Debt Settlement
Debt settlement will suffice for active military members and veterans who don’t qualify for debt consolidation loans. Most borrowers who fall in this category are ones with bad credit scores and even worse credit histories.
Debt settlement agencies consist of experienced professionals trusted with negotiating lower terms and the general amount owed to members. Debt settlement can work for almost all debt types including personal loans, mortgages, and credit card debts.
If you also have student loans, medical bills, phone bills, and utility bills up on your neck, debt settlement can come in handy. And this is an even better option for borrowers with severe debt situations and are contemplating bankruptcy.
The group of experts do an excellent job in driving hard bargains and will easily stand against intimidation by lenders. You’ll even know in advance your repayment amount by the end of the negotiations.
However, these services will cost you in form of money, time, and credit profile. First off, most borrowers find their service expensive. Watch out that you don’t spend more than you would if you paid for the debts directly.
The whole process could take long, basically, as long as you’ll take depositing all the amount owed or just any amount enough to start a negotiation. Remember, as you continue to do so, neither your interests nor penalties will remain constant.
Lastly, after all the struggle with repayment, you’ll still have a stain on your credit profile that stays for 7 years. You’ll also lose 100 points off your credit score.
The process of choosing a debt settlement company should be thorough. You’re not to ignore anything from fees charged to former customer reviews. Also, look out for scammers preying on novices in desperate debt situations.
Military and veterans debt-relief options
Still no progress with your debts despite going out of your way to finishing? Then you’re probably faced with overwhelming debts. To break free from these chains, debt relief can come in handy.
Please note that debt relief is only for;
- Borrowers with no hope of repaying such unsecured loan as medical bills, credit card debts, and personal loans for up to 5 years despite extremely cutting your budget to offset your loan
- Borrowers whose total debts owed equals more than half their monthly gross income
It’s not advisable to go for debt relief if you don’t make the groups above. If yours is a debt you can manage to repay within the next five years, then you shouldn’t consider debt relief.
Debt relief options include;
- Bankruptcy – bankruptcy is for borrowers who can keep up with neither debt management nor settlement. Bankruptcy erases almost all debts including credit card debts, personal loans, and medical bills. Please note, however, that filing for bankruptcy won’t take away your tax responsibilities, student loan, or child support obligation. It may seem like an easier way out of debts, but its consequences are severe and costly. If you have a cosigner, they’d be forced to take full responsibility for the loan. Your credit score will also be affected and this will be a mark on your credit reports for up to 10 years. That will likely affect your possibility of landing certain jobs, closing some business deals, and entering some leases. However, bankruptcy can help you rebuild your credit score faster, especially if you had a severely damaged credit score. Please note, however, that lenders still reserve the right to sue you. However, they won’t be able to recover anything
- Debt management plan – with a debt management plan, the aim is to be able to repay your unsecured debts with waived fees and reduced interests. You basically make the payment to your chosen credit agency that proceeds to distribute it among your lenders. You’ll mostly be advised to close your credit accounts, at times even do without them until you finishing repaying your loans. This could hurt your credit score. However, a debt management plan in itself doesn’t hurt your score
- Debt settlement – debt settlement isn’t recommended and should be the last resort, especially for those who don’t qualify for bankruptcy. Instead of paying your creditors directly, this arrangement requires that you deposit the funds in an account controlled by your chosen debt settlement agency. This goes on till you accumulate enough money to start negotiations with your lenders. Remember, during this period, taxes, penalties, and interests will also keep accumulating. This will also further damage your credit profile.
Frequently Asked Questions (FAQ)
The servicemembers Civil Relief Act provides protection against foreclosures and evictions for those paying bills and loans while still on active duty.
The table above has some of the best debt consolidation loans for military and veterans. Be sure to check them out.
No. But they have personal loans that can serve as an excellent alternative to debt consolidation loans.
Any service member or veteran aged above 18 years with either a good or bad credit score.
Our chosen lenders above offer between $500 to $50,000
