What Are Veteran Personal Loans?

A “veteran personal loan” is a personal loan taken out by a veteran, although banks do not commonly offer a personal loan specific to veterans.

A veteran personal loan is not the same as a VA loan, which is a mortgage from the federal program established by the U.S. Department of Veterans Affairs that offers loans specifically to veterans. The VA Loan program and allows veterans to buy a home with little to no down payment.

Personal loans are typically designed for anyone to apply, including veterans. Many of the best personal loans are just as good a deal for veterans as they are for those who haven’t served in the military. However, some credit unions are only open to veterans, and they may offer good personal loan deals.

In this article, we’ll look in more detail at personal loan options for veterans and how to compare different personal loans.

What Are Veteran Personal Loans?

Veteran personal loans are essentially personal loans taken out by veterans. A personal loan is a loan you can borrow to use for a nearly any purpose. For instance, you may use a personal loan to consolidate debt, pay for home renovations, or pay for a wedding.

You can get a personal loan from financial institutions like banks, credit unions, or online lenders. The money you borrow will be provided in a lump sum and must be repaid over time with interest. Some lenders may also charge fees.

If you are currently serving in the military, you are covered by the Military Lending Act (MLA). This limits the interest rates that may be charged on many types of consumer loans to no more than 36% and provides other important protections. It covers payday loans, overdraft interest, and personal loans. These limits only applies to people on active duty, not veterans.

VA Loans

Veteran personal loans are not the same as VA Loans, which are mortgages for veterans who are buying a home.

A VA loan is a mortgage available through a program established by the U.S. Department of Veterans Affairs (VA) (previously the Veterans Administration). With VA loans, veterans, service members, and their surviving spouses can purchase homes with little to no down payment and no private mortgage insurance. They generally get a competitive interest rate.

With this type of loan, the VA sets the qualifying and lending standards, but it doesn’t actually provide the loan. Rather, private lenders (such as banks and credit unions) administer the loan. This type of loan is available to active service members, veterans, and their spouses. However, it can only be used to buy property.

Best Veteran Personal Loans

Providers of personal loans include banks, online lenders, and credit unions. Make sure to shop around before you agree to a loan, because the cost of a personal loan varies between providers. 

In most cases, the best personal loans for veterans will be the same as the best personal loans for those who haven’t served. Look for a loan with a low interest rate, a payment term that fits your financial circumstances, and that has low fees. In general, a loan from a bank or a credit union will be the best option.

Some credit unions cater specifically to veterans, and may be able to offer you a better deal than you’d find on the open market. They are also more likely to understand your circumstances, and may be more willing than a bank to work with you if you have bad credit.

How To Qualify For a Veteran Personal Loan

Qualifying for a personal loan, whether as a veteran or not, is generally only dependent on your credit score. Personal loans are generally unsecured. This means that you are not required to put up collateral for the loan, so you don't risk losing your property if you fail to make payments.

When you apply for a personal loan, you can generally get “pre-qualified” for a loan for a specific amount. Your lender will perform a “soft” credit check which won’t affect your credit score in the long term. When you finalize the loan, your lender will then perform a “hard” credit check to ensure you can repay it. This can impact your credit score, but it will recover as you pay back the loan.

How To Choose The Best Veteran Personal Loans

The cost of a personal loan will vary depending on your lender and your loan terms. So, it’s important to shop around and understand the cost of a loan before you accept it.

In general, the cost of a loan is determined by three main factors:

• The interest rate: Interest rates can range from about 5% to more than 30%, and you should look for the lowest interest rate available. You are more likely to get a low interest rate if you have a good credit score.
• The length of the loan: The longer you spend paying back the loan, the lower your monthly payments will be. However, you’ll pay more interest. Choose a loan with the shortest term that you can comfortably afford.
• Fees and penalties: Some loan providers charge fees, and some impose hefty penalties for late payments. You should look for a loan with the lowest fees possible.

How To Get a Veteran Personal Loan

The first step in getting a veteran personal loan is to shop around for the best deal. Once you’ve found a loan that makes financial sense for you, the process of applying for a personal loan can differs slightly between the three main types of provider:

• Banks: If you apply with a bank, you can generally fill out an online application, or apply in-person at a branch if you prefer. The bank will generally ask you for some personal details if you don’t already have an account with them, and perform a credit check to make sure you can repay the loan. You will typically receive your loan within a few weeks, though some banks can process your application much more quickly.
• Credit unions: If you apply for a personal loan from a credit union, this adds an extra step. First, you will need to apply to become a member of the union. The exact application process depends on the union – some will allow you to apply online, with others you’ll have to visit a branch. Once you are a member, you can apply for a personal loan in the same way as with a bank.
• Online lenders: Online lenders offer the most convenient application process. Some online applications can take less than half an hour, and some lenders will send your money on the same working day.

The Bottom Line

Veterans can apply for personal loans from banks, credit unions, and online lenders. The best personal loans for veterans are generally the same as the best personal loans for non-veterans, which are loans with low interest rates, a suitable repayment term, and low fees.

Consider consulting with a professional financial advisor for guidance on which personal loan will best meet your needs.