Thursday, July 25, 2013

Military Car Loans

I just got off the phone with my brother who is a physician in the Army. He had just bought a new car and after talking about all the new cool specs in it we got to talking about how low auto car loan rates are right now. So I thought I write a quick summary about the rates in case anyone is buying a car in the near future and hopefully it will save you some time

The three major military associated banks are
  1. USAA
  2. Pentagon Federal Credit Union
  3. Navy Federal Credit Union

Lets compare each of these banks by Used vs. New car loan rates (remember however that these rates also can be higher depending upon your credit score)

Used Car Loans

  1. USAA - 2.49% ($15,000+) or 3.99% (under $14,999)
  2. Pentagon Federal CU - 1.74% (all prices)
  3. Navy Federal Credit Union - 2.59% (up to 36 months) or 2.99% (36-60 months)
OVERALL VERDICT FOR USED CARS - Pentagon Federal. They keep it simple too. I like how its the same rate no matter how much the loan is for or no matter how long the loan period is. 

New Car Loans

  1. USAA - 1.39% (up to 36 months) or 1.99% (36-60 months)
  2. Pentagon Federal CU - 1.74% (any time period)
  3. Navy Federal Credit Union - 1.49% (up to 36 months) or 1.79% (36-60 months)
OVERALL VERDICT FOR NEW CARS - USAA (for loans less than 36 months) or PenFed (for loans more than 36 months

These banks also have programs where you can buy cars through their car buying service to receive even lower rates
  1. USAA - 0.89%
  2. PenFed - 0.49%
  3. Navy Federal - 1.49%
Overall verdict for car buying service - PenFed

My Personal Experience
I bought a used 2009 Hyundai accent in June for $6500. I had the cash on hand to buy it but I figured it would be smart to get a car loan to build my credit and just invest the loan money. The rate I received at the time was 1.99% for all used cars for PenFed. I took out a 3 year car loan for $7000. With the 1.99% APR, I will have paid $7,225.40 buy the end of the three years. To me this was a no brainer because I could put that $7000 away and invest it earning 10% in one year and thus already paying off the $225.40 interest from all three years of the loan. And like I said before I am using it as an opportunity to build my credit also.

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