Everything You Should Know About Military Debt Consolidation Loans

Managing credit card debt, personal loans, and other unsecured debts can be challenging as an active duty service member. It is possible you lack enough time to handle your finances. Fortunately, there is a convenient way to pay all your outstanding debts.

The Military Debt Consolidation Loan is a financial tool available for individuals who previously or currently serve in the United States military. This debt management program combines numerous debts into one. It makes it easier to pay and manage the debt you owe. It also gives you more time to focus on pertinent matters, like work and family.

Many military families face financial difficulties for one reason or another. The Military Debt Consolidation Loan aims to help them address these challenges and manage their finances better.

Understanding Debt Consolidation For Military Personnel

Before diving into debt relief programs available to military service members and veterans, let’s discuss debt consolidation. Debt consolidation is a method of debt refinancing that involves getting a new loan to pay off existing debts. It turns multiple debts into a consolidated, larger loan.

Consolidating debt may be a way to simplify or even lower one’s monthly payment. You only have to pay a unified loan every month for your convenience. Combining credit card debt and loans into a single loan can be beneficial in two ways. First, it eliminates the hassle of dealing with multiple payments and high interest rates. Second, consolidating your debt may help improve your credit score by lowering your chances of late payment.

Available Options For Military Debt Consolidation

Being part of the military offers various perks, including debt relief options. Before calling a debt settlement company, you should be aware of your choices. You can opt for a debt consolidation loan from traditional military lenders or a credit union. However, the former may better understand the challenges you face and communicate with you more effectively.

Various organizations offer military-specific debt consolidation programs. A popular option among veterans is VA Financial because it offers up to $40,000. You can use this money to repay high-interest credit card debt or overdue long-term loans. Additionally, their debt consolidation loan is available to any active or retired US Armed Forces member and their families. The application process is done within a few minutes because you don’t have to present any collateral.

The Armed Forces Bank is another military-specific organization you can consider. Their Access Loan program has an easy and fast process, so military members can gain access to the funding they need. It also offers flexible credit options for your convenience.

You can also try applying for a VA consolidation loan at Omni Military Loans. This institution has a wide range of repayment options for military loans. They offer highly competitive rates, making it easier for you to manage your debt payments.

Besides military lenders, traditional financial institutions allow you to consolidate loan for debt relief. For example, Achieve offers a low, fixed-rate loan between $5,000 and $50,000. It is payable in 2 to 5 years. This personal loan also doesn’t have any hidden charges or prepayment penalties.

Meanwhile, Happy Money offers very flexible payment terms. This company has a simple and transparent process, offering personal loans from $5,000 to $40,000. It offers low rates with an 11.25% annual percentage rate or APR.

Finally, consider submitting an application for a balance transfer credit card. As its name suggests, this credit card allows you to transfer a balance from other bills. This type of credit card usually has low-interest rates. It makes it more manageable to pay off other credit card debt you may have incurred.

Benefits Of Military Debt Consolidation Loans

With a military debt consolidation loan, you can finally settle off your home equity loan or auto loan. It brings relief and satisfaction when you no longer have to worry about monthly payments. However, the advantages of military debt consolidation loans don’t stop there.

Here are some of the benefits of applying for a military debt consolidation loan:

• Highly competitive rates. Debt consolidation loans usually provide lower interest rate options than payday loans and other debts. Taking a military debt consolidation loan lets you enjoy more manageable payment terms.
• Turning many bills into one. It can be overwhelming to pay several unsecured debts simultaneously. Given your busy schedule and limited time, you may find it difficult to make payments for all your loans from different creditors. By opting for a debt consolidation loan, you can effectively streamline your debts. Hence, you only have to follow a single obligation.
• Get more and pay less. In general, closing costs and interest rates are usually lower with a debt consolidation loan. However, the payment terms and overall amount you’re entitled to may be better when you apply for a military debt consolidation loan. Access to more funding increases your purchasing power for other expenses. It is also a protective measure for financial emergencies.
• Improved credit score. To maintain good credit scores, always pay your bills on or before their designated due date. This is something many service members find difficult to do. Consolidation loans offer flexible debt management, making it easier for you to improve your credit score.
• Simplified monthly budget. Managing your monthly expenses is easier if you only have a single loan to think about. This allows you to set a budget for other essential things, such as food and utilities.

Disadvantages Of Military Debt Consolidation Loans

While obtaining a military debt consolidation loan offers various benefits, there are disadvantages you should take note of. Here are some drawbacks associated with this strategy:

• Additional costs. A debt consolidation loan application may involve additional fees. These include closing costs and annual fees. When choosing a lender for your military debt consolidation loan, you should understand the actual cost of the debt consolidation loan.
• Higher interest rates. If you don’t have a credible credit score, you may be unable to access the lender’s most competitive rates. You might be subjected to a higher interest rate than your existing debts.
• More interest over time. Even if you have to pay a lower interest rate, you might have to pay more in interest because of your new loan’s monthly payment terms.
• Risk of missing payments. If you don’t pay your debt consolidation loan on time, you can cause significant damage to your credit score. You may also have to pay additional fees.
• Encouraging increased spending. Having larger funds at your disposal may create the perception that you have more money than you actually own. This might tempt you into spending more on things you don’t need.

Tips For Veterans For Successful Debt Consolidation

Whether you’re an active duty military personnel or a veteran, you should be mindful of the various perks you’re entitled to. For example, the Servicemembers Civil Relief Act grants you a reduced interest rate on credit card bills.

If you want to manage your debts better, here are some tips you should take note of:

Quit Using Your Credit Cards

Regardless of how low your debt consolidation interest rate is, you will still incur more debt if you keep using your credit cards. Shifting how you manage your budget is key to reducing and eliminating all your debts.

Make Sure Your Interest Rates Are Reduced

Before you sign the dotted line, you should ensure that your lender abides by the stipulations of the SCRA. This means that your interest rate should not be higher than 6%.

Get Credit Counseling Before Choosing A Lender

You should confer with a credit counselor to obtain the best military debt consolidation loan option. Credit counseling agencies can help you understand the implications of applying for military debt consolidation.

Remember To Set Up A Special Power Of Attorney

You need to designate someone to be your financial manager if you’re deployed in service or away for some reason. A Special Power of Attorney allows the designated person to adjust payment allotments as needed.

Military Debt Settlement

Many military members struggle with financial obligations. Fortunately, there are mechanisms in place, such as the Military Lending Act and military debt consolidation options, to make debt management more accessible. Financial literacy is critical to better managing expenses and paying off debt.

Resources And Support For Military Debt Management

If you need to learn more about military debts or have questions, you should take advantage of the available resources and support. Military veterans can contact the US Department of Veterans Affairs for support. Call them at 800-698-2411 or 800-827-0648 for further assistance.

Meanwhile, Military One Source is a helpful resource for active duty service members. You can call 800-342-9647 if you need assistance.

Debt.org is another website that provides valuable information about managing your debts. Moreover, the National Foundation for Credit Counseling can offer financial help, including VA loan programs. To learn more about the various perks you can enjoy, explore the Military Verification website further.

Conclusion

There are various military debt consolidation loans you can choose from. Before signing up for any loan, you should ensure you understand all the terms involved. You should also be proactive in your debt management efforts in order to be debt-free. Fortunately, there are resources such as Military Verification to help you manage the challenges you face better.

FAQs

Can the military help you pay off debt?

Various debt management programs, such as the Servicemembers Civil Relief Act and Military Lending Act, can help you with your debt. Some military branches may assist you in paying student loans through special loan repayment programs.

What is a debt consolidation loan?

This is a personal loan that converts various debts into one loan payment. Different financial institutions offer debt consolidation loans to choose from.

What happens to your debt when you go to the army?

During active duty service, you may be eligible for federal loan deferment. However, you are still required to pay off your loans in the future.

Does the military look at your debt?

You are subject to a background check upon enlisting in the military. The military might look into the financial problems you’re facing.