Military Car Loans – How to Get the Best New Car Loan

I just got off the phone with my brother, a physician in the Army. He had just bought a new car and after talking about all the new cool specs in it, we talked 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.

Military Car Loans

While you can get a car loan almost anywhere, you may find you will get better rates at banks and credit unions that specifically serve the military community.

The three major military associated banks are:

1. USAA
2. Pentagon Federal Credit Union
3. Navy Federal Credit Union

Let’s 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

I started by comparing loans at each of these financial institutions. Here are the results for loans of the same amount and for the same terms (length of the loan).

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 it’s the same rate no matter how much the loan is for or no matter how long the loan period is.

New Car Loans

Again, the following examples are for loans of the same amount and the same loan duration.

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).

View Rates for USAA Bank Auto Loans

Car Buying Service

These banks also have programs where you can buy cars through their car buying service to receive even lower rates. Note: not all of these financial institutions still have a car buying service.

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 by 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.