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Military Loans - Make sure you check out the company

Military Loans - What's the deal??

There are many great military loan deals out there if you are a member of the armed forces. If you are a in the US Navy, Air Force, or any other branch, you can land great personal loans at lower interest rates that can make your life easier. Service Men and Women need to beware though, the very service to your country that makes you eligible for such military loans also makes you vulnerable to bad loans as well. Here is comment from MCPON Terry Scott.

"At the same time, MCPON Terry Scott testified to an industry “that has made it a practice to prey upon our Sailors.” Payday loan outlets, he said, often are found within a short walk outside the gates in the communities that surround Navy homeports, offering easy loans but with very high interest rates as compared to commercial lenders. He told the subcommittee that many who turn to these payday loan outlets end up far worse off than before.

“It is not being dramatic to state these payday loans to our troops could be a threat to their military readiness,” he said." Source Navy newsstand

These companies of found that members of the USAF, Marines, or even the National Guard are ideal as targets for these types of loans. You, as a government employee, have a steady income from the US government and you have a very little to spare in most cases. Then, deployment time comes, and your family needs money for extra expenses. That is where these companies step in. They offer your family a quick cash payday loan at a “military loan” rate. The truth is, though, that they are taking very little off the rate and are only offering you and your family a loan that will force you to borrow again down the road to cover the original loan. These places will happily “roll over” your loan for a fee each week. Eventually you are in a debt trap.

The other thing that makes military personnel vulnerable to these payday loan traps is that they are often young and inexperienced with money. Then, as debt builds up, the indebted military personnel are embarrassed to admit their problem to their CO and end up continuing to borrow and pay only on interest and roll over fees. They are fearful for good reason, since failing to repay a loan violates a number of military codes that can result in jail time and or court marshal. Stop ask for help it is available on your base, but again you must find it. All bases are different when it comes to resources for all personnel.

So what is the answer? Many of these fake military loan companies are being kept away from military bases. Additionally, they are being forbidden from using names that imply affiliation with the military, which is a common practice with these military loan payday check cashing stores.

In the end, it is up to you to beware. This no extends to the online industry of military and payday loans. It is a good rule of thumb to simply avoid any payday loan store, but any that offer special military loans are likely just targeting you or your base for a cycle of debt you want no part of. If you have financial problems, many bases are even offering financial advice to young recruits. So ask for help, but avoid the trap that is payday military loans.

Military loans are available at reasonable interest rates for military personnel if you know your facts. MILITARY LOANS - JUST REMEMBER BORROWER BEWARE and do your homework.

Alternatives to Military Loans & PayDay Loans Companies:

Many believe that payday loans are the only option for consumers with bad credit, but other options do exist and most financial counselors would direct people to explore the alternatives. Other options are available to most payday loan customers.

Other options include:

- Credit unions
- Credit payment plans
- Paycheck cash advances from employers
- Overdraft protection
- Cash advances on credit cards
- Emergency community assistance plans
- Small consumer loans
- Direct loans from family or friends
- Online people-to-people lending marketplaces such as Prosper.com.

Ignoring the options above, payday lenders make the argument that the interest on a payday loan is less than the costs associated with bounced checks or late credit card payments. For example, bouncing a $100 check may incur an NSF fee from the bank of $28 and a returned check fee of $25 from the merchant. Critics counter that these other kinds of fees are exceptions, whereas the fees on a payday loan are a regular and repeating cost.

Payday lenders present their product's terms alongside a very different list of alternatives and associated fees (costs expressed here as APRs for two-week terms):

- $100 payday advance with $15 fee= 391% APR; 
- $100 bounced check with $48 NSF/merchant fees = 1,251% APR; 
- $100 credit card balance with $26 late fee= 678% APR; 
- $100 utility bill with $50 late/reconnect fees = 1,304% APR.

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