In a Nutshell
If you’re a military veteran ready for a new car, you may want to look for financing from a lender that caters to military members and their families. Although there is no such thing as a “veteran auto loan,” some carmakers offer military discounts and rebates that may help reduce the purchase price of your next vehicle.As a veteran, you may have access to credit union auto loans for former military members that could make car buying more affordable. After active duty, readjusting to civilian life can be a challenge. Not only do you need to adapt to a new lifestyle, but you may also have to shoulder new financial pressures. You may be able to get some help with at least one big purchase — a car.
Here are some things to know about financing your car as a veteran.
- Can I get a VA loan for a car?
- How veterans can save money when buying a car
- Other costs of car ownership
Can I get a VA loan for a car?
While the Department of Veterans Affairs offers home loan assistance, it doesn’t offer car loans for veterans.
Under some circumstances, however, VA can help with a vehicle purchase. If you suffered a disability while on active duty that interferes with your ability to drive, you may be eligible for an auto benefit.
Known as the automobile allowance and adaptive equipment benefit, this is a one-time payment of up to $21,488 paid out to veterans with qualifying injuries.
If you qualify, you can use this money to buy a vehicle that is adapted to your needs. For example, if your active-duty injury means you must drive a vehicle equipped with power steering or specialized brakes, you may want to apply for the benefit.
To check your eligibility, you need to file a claim for disability compensation and get VA approval before you purchase either a vehicle or adaptive equipment.
It’s a good idea to contact VA directly to get the program’s most up-to-date rules and guidelines.
Auto loans with discounts or special rates for veterans
If a VA benefit isn’t an option, you may have access to auto loan offers from credit unions. Credit unions are nonprofit businesses, meaning that rather than being profit-driven, they aim to focus on member services. Opting for a credit union — which you may be able to join if you meet certain requirements — could help you save some money. Some credit unions cater specifically to military personnel and may offer better loan options than some traditional lenders.
Credit union offers may vary widely, though, so it’s good to do some research.
How veterans can save money when buying a car
In addition to auto loan options from military credit unions, you may also have access to manufacturer-based discounts as a veteran.
Check out military offers
Some car dealerships and manufacturers may offer military discounts and rebates for veterans. Keep in mind that this is just a select representation of car manufacturers that offer a veteran discount. Check with your preferred brand for similar offers.
Ask for a discount
If your dealership doesn’t advertise a veteran discount, that doesn’t mean there isn’t one.
Come prepared with your military ID and ask what your options are. A car dealer might be willing to consider a discount for you.
Even a small APR allowance could save you a significant amount of money. For example, if you borrow $20,000 for a term of five years with an APR of 5%, you will pay $22,620 over the course of the loan. However, if you borrow $20,000 at 3% for the same term, you will pay only $21,540 over the course of the loan. As you can see, a small drop in APR can make a big difference in your wallet.
Other costs of car ownership
Beside getting a car, you’ll want to consider other costs associated with car ownership. Purchasing auto insurance, for example, can significantly affect your monthly payment.
Call your insurance provider to verify whether it offers veteran pricing.
What’s next?
If you’re a veteran and ready to buy a car or need special equipment to help you drive, you have options. These may include enlisting VA help, comparing military-specific pricing from car manufacturers and getting financing from credit unions that cater to military members.
Keep in mind that your credit is one of the factors that lenders consider when determining whether you qualify for financing. If you’re struggling to find a loan option, you may need to focus on improving your credit health.
You can get started by paying down debt and diversifying your credit mix.