Best Personal Loans for Excellent Credit

Active-duty service members may face financial challenges as they transition to civilian life, but personal loans for veterans can help. Although the Department of Veterans Affairs provides many benefits and services to support veterans and their families, these are not always enough.

Loans for veterans can be a critical source of additional financial support. But before you borrow, make sure you understand how to choose the best loan for you.

What you’ll learn here:

Veterans take out personal loans for a variety of needs, ranging from paying off credit card debt to managing moving expenses or making large purchases.

“Personal loans can be helpful as a means to pay down high-interest debt more efficiently,” says Nancy DeRusso, senior vice president and head of coaching at Ayco, a financial counseling company.

Veterans might want to use a personal loan to pay off credit card debt for a few reasons. First, transferring high-interest credit card debt to a lower-interest personal loan can help you pay off your debt faster than making minimum card payments and save on interest.

Second, a personal loan may also provide a more structured repayment plan than credit cards. And third, a low-interest personal loan can be a valuable way to make a large purchase without tying up your cash or other assets, DeRusso says.

But as useful as personal loans for veterans can be, they are still obligations, warns Richard Delgado Jr., director of military affairs at Texas A&M University-San Antonio.

“I would really caution veterans about the importance of avoiding the temptation to take out more than they might need in the form of a personal loan,” Delgado says. “They should only take out what they really need in order to avoid going more deeply into debt, which is never a good idea.”

For personal loans, veterans must use the same types of lending institutions as civilian borrowers, DeRusso says.

Veterans might scour the web for VA personal loans, but they won’t find any. The VA does not give out personal loans for veterans.

Delgado says credit unions and institutions that serve veterans can be a smart first stop when loan shopping.

“Credit unions often do a lot of work both with active military and with veterans,” he says. “If you’re transitioning from active duty to civilian life, the credit union will be more understanding about your specific circumstances than a traditional lender. ”

A military credit union will grasp the ramifications of deployment, the transition home and the circumstances that might cause a late payment, Delgado says. USAA and Navy Federal Credit Union, for example, are known for helping service members, veterans and their families.

The most important step when seeking a personal loan for veterans is to do your homework. You’ll need to evaluate your budget and each lender you’re considering.

“In today’s low-interest-rate environment, it is very easy to justify borrowing because debt is cheap,” says Anne Anderson, Weatherford chair of finance at Middleton Tennessee State University and U.S. Army veteran. “However, without a sound financial plan to include a budget, any debt, no matter the cost, can lead to financial problems if not managed well.”

Compare personal loans, looking at eligibility requirements, interest rates, maximum loan amounts, and repayment terms and fees, DeRusso says. “As with any personal loan, making sure the loan and rate work for you is the most important factor,” she says.

Generally, the longer the term, the smaller the payment, but you will pay more in interest over the life of the loan, Delgado says.

Once you are certain the loan fits into your budget, Anderson says to ask the lender questions. Do not sign anything that you do not understand.

A personal loan is not your only option if you’re a veteran who needs extra cash. Veterans can access many financial resources, including benefits and grants that do not have to be repaid, DeRusso says.

If you need to borrow, some options could have lower interest rates and better repayment terms than personal loans, she says. Compared with a personal loan, a VA home refinance loan may be more accessible to certain borrowers with lower credit scores.

Many nonprofits and certain government agencies can provide other financial resources for veterans. The National Veterans Foundation helps veterans write and submit benefit claims to the VA, and the Coalition to Salute America’s Heroes may be able to assist with certain expenses, DeRusso says.

Veterans who want to start businesses can even get help: The Small Business Administration offers guaranteed Veterans Advantage Loans with SBA fee relief.

“Veterans should make sure they are aware of the various resources and benefits available to them before taking out a personal loan,” DeRusso says. “The VA publishes an annual guide highlighting the federal benefits available.”