What are personal loans for veterans?

Personal loans for veterans are typically unsecured loans offered by banks, credit unions and online lenders. These loans range from $1,000 to $50,000 and are repaid in fixed monthly installments, spread out over several years. Personal loans are available to veterans even if they have bad credit (629 credit score or lower).

Veterans in particular face numerous financial challenges that may lead them to seek out a personal loan. Active duty — which may include unpredictable deployments, base relocations or spouse unemployment — can stress household budgets, and there are often additional hardships once veterans transition to civilian life, like medical issues or loss of military benefits.

This can leave veterans vulnerable to predatory lenders, especially since protective legislation like the Military Lending Act and the Servicemembers Civil Relief Act applies only to active duty service members. It’s important to go with a reputable provider when applying for a personal loan.

What is the Military Lending Act?

The Military Lending Act, or MLA, is a federal law that protects active duty service members, their spouses and their dependents from predatory lending.

The MLA established a few automatic protections — most notably, a 36% interest rate cap, meaning lenders can’t charge more than 36% interest when extending credit.

What is the Servicemembers Civil Relief Act?

The Servicemembers Civil Relief Act, or SCRA, provides financial protections to active duty service members, but it only covers debt taken on before active duty service began.

Among its protections, the SCRA establishes that any pre-service loans may charge a maximum 6% interest rate.

When to consider a personal loan as a veteran

The best reason to use a personal loan is when it’s the least costly method of borrowing and it helps you realize a financial goal, such as consolidating your debt at a lower rate or increasing the value of your home with a home improvement project.

However, many borrowers use a personal loan to cover a large, unexpected expense, like an emergency car repair. Personal loans are a better option than high-interest alternatives like payday loans, since they’re easier to repay and can even help build your credit score.

Compare multiple offers from lenders to find the best deal and check your budget to ensure you can comfortably repay the personal loan as scheduled.

How to choose the best personal loan for veterans

There are a few things to consider as you compare personal loans.

Annual percentage rate: The annual percentage rate includes the loan’s interest rate and any fees, and it’s one of the best ways to measure affordability. For example, a two-year $5,000 loan with a 15% APR would cost $818 in interest. The same loan with a 10% APR would cost $537 in interest. The lower the APR, the cheaper it is to borrow the money.

Monthly payments: Consider a personal loan only if you're certain you can afford the monthly payments for the full term. Missing loan payments can lead to costly fees and lower your credit score.

» MORE: Estimate monthly payments with NerdWallet’s personal loan calculator

Repayment term: Repayment terms on personal loans usually range from two to seven years, though longer terms are available from some lenders. If you choose a longer repayment term, you’ll have lower monthly payments, but you’ll also pay more in interest.

Funding time: Online lenders tend to fund loans faster than banks or credit unions, which can take up to a week to deposit the money into your account after you’re approved. Many online lenders promise next- or same-day funding.

Special perks: Lenders might offer other benefits that may appeal to you. For example, if you’re using a loan to consolidate debt, search for lenders that will pay your creditors directly so you don’t have to. Other lenders may include free financial education or a free monthly credit report as part of their loan product. Some lenders may offer special perks to active duty or retired military, like a rate discount.

» COMPARE: Best debt consolidation loans

What veterans need to qualify for a personal loan

Eligibility requirements

Lenders consider these to determine your eligibility for a personal loan:

• Credit score and history.

• Income.

• Existing debts.

A loan applicant with good to excellent credit (a score of 690 or higher) is most likely to qualify for a personal loan with a low rate. However, some lenders specifically cater to applicants with bad credit and limited credit history.

» MORE: Best personal loans for bad credit

Not all lenders publish income requirements, but they ask about your income on loan applications to ensure you earn enough to make the monthly payments. Include all sources of income in your application, such as disability benefits or rental income.

Lenders also review your debt-to-income ratio, which is the percentage of your monthly income that goes toward debt payments. A DTI below 36% is ideal for many lenders, but some accept borrowers with more debt.

How to boost your chances of qualifying

If you have bad credit, low income or a high debt-to-income ratio, you can boost your chances of qualifying for a personal loan with a joint, co-signed or secured loan.

Joint loans and co-signed loans involve adding another person — ideally with better credit or more income — to your loan application. This person is equally responsible for loan repayment and, depending on the type of loan you choose, may have access to the loan funds.

A secured loan involves tying collateral to the loan, like a car or an investment account. This helps guarantee the loan, which makes the lender more likely to approve you, but you risk losing the collateral if you fail to repay the loan.

How to get a personal loan for veterans

1. Check your credit

You can get your free credit score at AnnualCreditReport.com or by signing up for a NerdWallet account. If you have time before applying, look for quick ways to build your score, such as disputing errors on your credit report, paying down any small debts or asking for a credit limit increase on existing credit lines.

2. Pre-qualify with multiple lenders

Pre-qualifying is one of the best ways to determine whether a personal loan is the right choice. The process lets you preview potential loan terms, including APR, loan amount and monthly payments, without impacting your credit score.

» MORE: Pre-qualify with multiple lenders for free on NerdWallet

3. Submit an application

Once you’ve chosen an offer, it’s time to apply. Personal loan applications are typically available online. You’ll be asked to provide basic personal information, including your Social Security number, and contact information like a home address, phone number and email address.

You also may be asked to include proof of identification and proof of employment and income.

» MORE: How to apply for a personal loan

4. Get funded

After submitting your application, approval time can be instantaneous or take a few days, depending on the lender. Expect your loan to be funded within a week. Many online lenders say they can fund a loan the same- or next day after approval.

Once you receive the funds in your account, make a plan to repay the loan. Missing even one payment can hurt your credit score and trigger late fees.

Other financial resources for veterans and active duty military

Veterans seeking personal loans or short-term emergency cash may have other resources such as grants, which provide free money with no repayment required, and financial assistance.

These are just a few of the many resources available to veterans. A complete list of veterans service organizations can be found through the Department of Veterans Affairs.

Federal benefits

U.S. Department of Veterans Affairs: The VA’s annual guide to federal benefits for veterans, dependents, survivors and caregivers offers information on disability compensation, housing grants for disabled veterans and educational assistance.

U.S. Government Guide to Military Pay and Benefits: The U.S. Government maintains a webpage dedicated to military pay and retirement benefits (including pensions), plus tuition assistance, health benefits and burial and survivor benefits.

Job training and placement

Blue Star Families: This nonprofit organization helps connect military families with free resources and services, including job opportunities for military spouses.

Hiring Our Heroes: The U.S. Chamber of Commerce Foundation launched this nationwide initiative to help veterans, transitioning service members and military spouses find employment. Hiring Our Heroes hosts hiring fairs and education and networking programs, and offers a corporate fellowship program.

Grants

VFW Unmet Needs Program: The Veterans of Foreign Wars offers this program for military families who have financial difficulties stemming from deployment or other military-related activity or injury. It provides grants up to $2,500 and can be used for eligible expenses, which include household expenses, vehicle expenses, utilities, childcare and medical bills.

American Legion Temporary Financial Assistance Program: This nonprofit veterans organization awards cash grants of up to $1,500 to children of current active duty military or American Legion members to help meet an urgent need like shelter, food and health care costs.

Business grants and resources for veterans: Veterans who are looking to start a business or who are existing business owners can seek financial assistance through the Small Business Administration, which offers funding, training and federal contracting opportunities for veterans, as well as resources for military spouses.