Comparing Military Consolidation Loans and Civilian Consolidation Loans

Comparing Military Consolidation Loans and Civilian Consolidation Loans

If you are a member or veteran of the United States Armed Forces, you may want to consider getting a military consolidation loan. Military and civilian consolidation loans can both help you focus on your debt and effectively eliminate it, but there are some significant differences between these types of loans.

Cheaper Interest Rates

A number of lenders sell loans to military members at a discount. Military consolidation loans typically offer cheaper interest rates than civilian loans. The cheaper payment that results from a lower interest rate can save you quite a bit of money over the life of the loan.  

Approval Process

When you apply for a civilian consolidation loan, much of the approval decision comes based on your credit history. If you do not have acceptable levels of credit built up, you may not be approved. With military consolidation loans, lenders are usually a little more flexible with their credit approval guidelines. Unlike for civilian consolidation loans, they may be willing to approve applicants who have borderline credit scores.

Fewer Options

One drawback to going with military consolidation loans over civilian consolidation loans is that you will have fewer choices. Compared to the civilian market, there are far fewer lenders that have designated military programs. You may not find such a lender in your geographical region. Even if you do find a lender with a military program, they might have limited loan options to choose from. You may have to look harder to find a lender that can meet your needs and get you approved. In these cases, it may be to your advantage to go with a civilian loan for the sake of convenience.

Loan Limits

Most of the military programs have loan limits on them, and when using a military consolidation loan, you may be forced to work with a lower loan limit than you could get with a civilian loan. Some civilian consolidation loans can be very high for those with a great deal of debt to consolidate. Therefore, if you are in the military and need to consolidate quite a bit of debt, it may be to your advantage to look at both types of programs. 

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