4 best armed forces loans

Parent smiles at young son while holding him in her arms.Image: Parent smiles at young son while holding him in her arms.

In a Nutshell

There are many lenders that offer loans to active-duty and retired military members and their families. Check out our list of the top four.
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Whether you’re active duty, a retired military member or part of a military family, a personal loan can help you cover the cost of just about anything.

You can use a loan to consolidate debt, repair your car, renovate your home, pay for unexpected bills or even go on vacation. And if you take out a personal loan, you may not have to pay a sky-high interest rate if you’re covered by the Military Lending Act, which caps APRs at 36% for active duty, active Reserve and certain National Guard personnel, as well as dependents with a valid military identification card.

But how do you know which loan is right for you? We’ve done the heavy lifting and compiled four of the best armed forces loans.



Best for service members with bad credit: USAA

Why USAA stands out: USAA has been around since 1922 and serves more than 13 million military members. Since its personal loans come with a low maximum APR compared to other lenders, USAA may be a good option for members who are currently serving, or their family members or veterans who have had past credit issues.

  • Must be a member — You’ll need to become a USAA member to take out a personal loan. As long as you’re in the military, a veteran, a precommissioned officer, or a military spouse or child, you can join for free.
  • Autopay discount — If you set up automatic payments, you can enjoy a 0.25% autopay discount on your rates, even if you have bad credit. You’ll be able to change your automatic payments whenever you’d like. This feature is tough to find on the USAA official site — you may need to contact the lender to learn more.
  • No application or prepayment penalty fees — USAA doesn’t charge application fees or prepayment penalties. This is great news, especially if you’d like to pay your loan off early.

Read reviews of USAA personal loans to learn more.

Best for service members with good credit: PenFed

Why Pentagon Federal stands out: Though anyone can join Pentagon Federal Credit Union, it was originally created for military personnel and offers programs to support people in the armed forces. Its low starting APR is ideal for veterans with a strong credit history.

  • Only for members — To take out a personal loan, you’ll need to join PenFed. Even though membership requirements are lenient, you must open a savings account and deposit at least $5.
  • Can apply for prequalification — PenFed allows you to prequalify online without hurting your credit, which can help you find out if you’re eligible for the lowest rate. Take note: You’re not approved for a loan with finalized terms until you submit a formal application.
  • Potential to get your money fast — If you’re approved, you can receive your funds via direct deposit as soon as the next day, depending on your bank. But if you prefer a check in the mail, you’ll need to wait several business days.

Read our full review of PenFed personal loans to learn more.

Best for military families who want to consolidate debt: Marcus

Why Marcus stands out: Marcus, which offers personal loans to everybody, has good options for military families who’d like to pay down their high-interest debt. Marcus sends funds directly to creditors with debt consolidation loans. These fixed-rate loans come in amounts up to $40,000 and don’t have any fees.

  • On-time payment reward — If you make 12 full, on-time payments in a row, Marcus will reward you with the ability to defer one payment without worrying about any extra interest or fees. This can come in handy if you’re short on cash or made a large purchase one month.
  • Can explore your options — You can apply for prequalification online to find out what types of loans you may qualify for without taking a toll on your credit. Note that prequalification isn’t a guarantee of approval, and you may be offered different terms after completing a full application.
  • Strict eligibility requirements — Unless you have good credit, you may have a tough time qualifying for a Marcus personal loan. Goldman Sachs’ 2021 annual report shows that most of the company’s installment loan borrowers had credit scores of at least 660.

Read reviews of Marcus personal loans to learn more.

Best for service members with a large expense: SoFi

Why SoFi stands out: SoFi loans range from $5,000 to $100,000, making SoFi a solid pick for anyone, including military personnel, who wants to fund a large expense. SoFi personal loans can give you the cash you need to furnish your home, fund a home improvement project, travel, pay for family planning or fulfill any number of other financial needs.

  • Perks for members — Once you get approved for a SoFi loan, you’ll become a member and enjoy a number of perks. You can score interest rate discounts on other loans and take advantage of career coaching and special events like happy hours and dinners.
  • Unemployment protection — If you get laid off from your civilian job, you may be able to pause payments until you find a new one. SoFi may also help you with the job hunt.
  • No fees — SoFi doesn’t charge fees — just interest. If you choose to get a SoFi loan, you won’t have to worry about origination fees, late payment fees or prepayment penalties.

Read reviews of SoFi personal loans to learn more.

What you should know about armed forces loans

Many lenders offer personal loans to military members and their families. While it may be tempting to choose a lender with a military affiliation, it’s smart to shop around. Once you do, you might find you’re better off with a lender that lends to everyone.

Before you commit to a loan, do your research and prequalify if you can. Compare the interest rates, terms and perks of all your options. And remember that your interest rate (as a military-affiliated borrower) may be capped at 36% per the Military Lending Act, so any lender that tries to offer you a higher rate isn’t a good option.

How we picked these loans

We reviewed loans from a dozen lenders, some of which are affiliated with the military. Then we compared loan amounts, interest rates, fees and unique benefits.


About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.