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Everything You Need to Know


Everything You Need to Know

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Everything You Need to Know

After serving in the military, you might find yourself having to readjust to civilian life. This transition can be difficult whether you’re looking to settle into retirement or continue your career in the private sector. Unique challenges include integrating back into your family, establishing a support system, and navigating financial pressures.

Financial pressures are particularly rampant, as veterans may not receive the benefits they need after their service. A veteran who needs supplemental income might not be able to work upon returning home due to a service-related injury. Veterans can also have a hard time building credit, paying off loans, and recovering from the exorbitant costs of moving every few years.

With these financial challenges to worry about, buying a car might seem impossible. However, it’s often a necessary expense when veterans return home. You might need to buy a car whether you’re coming back from overseas or moving from somewhere that allowed you to use public transportation.

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The good news is that buying a car is well within reach for veterans like you. Several organizations want to show gratitude for your service by making this big purchase more accessible. This guide on veteran car loans will help you learn everything you need to know about obtaining financing for your new vehicle. We also cover other tips for affording a car after your military service, including how to obtain discounts from military credit unions and dealerships.

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Does the VA Offer Auto Loans?

Seeing as Veterans Affairs (VA) offers everything from purchase loans to cash-out refinances to help veterans buy homes, you might be surprised that there are no VA auto loans. This federal department doesn’t currently have any general programs to help veterans purchase new cars. However, a former military service member facing extenuating circumstances might be able to receive financial assistance if they qualify for the VA Automobile Allowance and Adaptive Equipment program.

What Is the VA Automobile Allowance and Adaptive Equipment Program?

The VA Automobile Allowance and Adaptive Equipment program is part of the U.S. Department of Veterans Affairs disability benefits. It issues a one-time payment of up to $22,355.72, which you can use to buy a specially equipped vehicle so you can safely drive with your service-related injury. In some cases, you can get adaptive equipment grants to modify a vehicle in accordance with your disability. For instance, you might add features like special brakes, seats, windows, power steering, or lift equipment to make entry and exit more accessible.

VA Automobile Allowance and Adaptive Equipment Program Requirements

Veterans and current service members can qualify for the VA Automobile Allowance and Adaptive Equipment benefit if they suffered a service-related injury that inhibits their ability to drive. The injury, also known as a service-connected disability, must include at least one of these conditions:

  • Loss, or permanent loss of use, of at least one foot
  • Loss, or permanent loss of use, of at least one hand
  • Permanent decreased vision in both eyes
  • Ankylosis in at least one hip or knee
  • A severe burn injury
  • Amyotrophic lateral sclerosis (ALS)

How to Apply for the VA Automobile Allowance and Adaptive Equipment Program

Veterans who think they might qualify for the VA Automobile Allowance and Adaptive Equipment program must file a claim for disability compensation and ensure their service-connected disability falls under 38 U.S.C. 1151. Additionally, you must obtain the VA’s approval before you buy a specialty vehicle or adaptive equipment. If you don’t, you won’t receive reimbursement for your purchases.

Buy a Specially Equipped Car

If you don’t already have a car, or if your injuries call for a vehicle with several modifications, it might be ideal to buy a specially equipped car. Claim a one-time payment from the VA by filling out the Application for Automobile or Other Conveyance and Adaptive Equipment, also known as VA Form 21-4502. The VA will issue the payment directly to the vehicle’s seller.

Buy Adaptive Equipment

Some veterans only qualify for grants for adaptive equipment. This option can also be ideal if the maximum payment of $22,355.72 isn’t enough to help you afford a specialty car or if you want to make your current car more accessible. Claim your grant by filling out the Application for Adaptive Equipment—Motor Vehicle form, also known as VA Form 10-1394. The VA may issue the payment directly to you or the equipment seller.

Military Credit Unions That Offer Auto Loans

Though the VA Automobile Allowance and Adaptive Equipment program is a great help to veterans, not all former service members will qualify for it. Just because you don’t have qualifying injuries doesn’t mean you don’t need financial assistance after returning home. Fortunately, military credit union auto loans are another way to obtain the necessary funding to purchase a car. Here are some of the top credit unions among former military personnel:

Navy Federal Credit Union

You can qualify for a membership with Navy Federal Credit Union by:

  • Being a veteran
  • Having current ties to the armed forces, National Guard, or Department of Defense
  • Having an immediate family member who has membership with Navy Federal Credit Union

Membership is for life, meaning you don’t have to qualify again when you return to civilian life as long as you keep your account open. When members are ready to get the financing they need for a new car, they can take advantage of this credit union’s affordable auto loans. You can get a new vehicle auto loan or refinance loan as low as 3.29 percent APR (annual percentage rate). Loan periods ranging from 36 months to 96 months give you the flexibility you need to keep your payments affordable.

Current and former military personnel save even more, thanks to exclusive military discounts. You can qualify for a military discount by opting for direct deposit and calling the credit union or visiting a branch in person. Another reason Navy Federal Credit Union is popular among veterans is because of its fast approvals. Many applicants receive a decision within minutes, so be sure to provide a current email address during the application process. Quickly getting the funding you need for a new car is a crucial part of the transition back to civilian life.

Veterans also appreciate Navy Federal Credit Union because of its car-buying service. Use the loan you qualified for to shop online and buy a vehicle from one of the credit union’s certified car dealerships.

Service Credit Union

Service Credit Union is another organization that caters to active duty military personnel, veterans, current and former Department of Defense employees, and their families. Auto loans come with rates as low as 3.74 percent APR, and you can use the credit union’s car loan calculator to get an accurate estimate for your monthly payment. New car loans come with flexible terms to help you afford the vehicle you want without having to compromise.

As for used cars, you can get a loan with the same low rate as a new vehicle loan if the car you’re buying is less than three years old. While Service Credit Union can help you get a new or used car, it also provides loan packages for boats, ATVs, RVs, snowmobiles, and other types of vehicles. Additionally, veterans can keep the vehicle they have, thanks to affordable refinance car loans.

PenFed Credit Union

While PenFed Credit Union has historically served those with connections to the military, membership is now available to anyone in the U.S. Obtaining an auto loan through this organization is a good option for veterans looking for rates as low as 4.44 percent APR up to 36 months. PenFed Credit Union also works with members who have fair credit, meaning you might be able to qualify when other lenders turn you away. This accessibility is especially important for veterans who don’t have time to look for various quotes upon returning home.

Aside from standard loans for new and used cars, PenFed Credit Union offers refinancing packages and a car buying service to make your shopping journey that much easier. Veterans also appreciate gap protection, extended warranties, and debt protection programs that help them stabilize their financial situations.

Obtain an Auto Loan Through a Bank

Obtaining an auto loan through a credit union is desirable if you want to get the lowest possible APR. Members have full ownership, meaning any money these nonprofit organizations make returns to members in the form of lower loan rates. However, credit unions usually have stricter lending requirements. If you’re a veteran in a poor financial situation, you might find it easier to qualify at a bank. In addition to being more forgiving with loan requirements, some banks offer military discounts.

Obtain a Loan Through USAA

One example of a bank offering loans that are accessible to veterans is USAA. New car loans are available as low as 3.79 percent APR, while used car loans start at 4.54 percent APR. Veterans will appreciate no application fees, flexible terms up to 84 months, and a 0.25 percent rate discount when they enroll in automatic payments. Though applicants receive their decision in minutes, the offer remains valid for 45 days to give you time to keep searching for the right deal.

What Credit Score Do You Need for a USAA Auto Loan?

While USAA doesn’t specify a minimum credit score, borrowers with poor credit can qualify for auto loans through this bank. USAA looks at the bigger picture to ensure everyone can obtain the financing they need. This flexibility is especially helpful for veterans who need to refinance underwater loans or qualify for funding despite their poor credit history.

How Veterans Can Obtain Financing Through Dealerships

Military auto loans through credit unions and banks come with many benefits, including being able to use the funds to buy cars from private sellers. If you’re looking to buy a new or used car from a dealer, consider obtaining financing through the dealership. Most dealerships have finance centers that can match you with a new or used car loan. However, make sure to do your homework first and get pre-aprovals from credit unions or loan sites that do a soft-pull of your credit report to see what rates are available to you so you cna pick the best deal.

Additionally, military discounts at car dealerships are common as a way to thank veterans for their service. Check the websites of local dealers in your area to see what kind of offers they have. Current and former service members often qualify for cash bonuses on eligible vehicles and APR discounts. If your preferred dealership doesn’t advertise military discounts, consider asking. Meeting with a sales representative with your military ID and asking about your options might help you enjoy significant savings.

Is It Easier for Veterans to Get an Auto Loan?

It isn’t necessarily easier for veterans to qualify for auto loans, as they often face unique financial challenges. Banks, credit unions, and other institutions might hesitate to provide financing if a veteran has poor credit. Even if a veteran with poor credit is able to qualify for a loan, they might face high interest rates that make their financial situations even more challenging.

Fortunately, there are many measures in place that can help veterans qualify for loans. Specific military auto loans have more lenient approval requirements, meaning lenders will work with borrowers who have lower credit scores. Military auto loans also tend to come with lower interest rates, faster decisions, and no prepayment penalties.

Additionally, most lenders are willing to work with veterans to ensure they have flexible payment plans. For instance, they might set a lower monthly payment by extending the life of the loan. Some lenders might even lower the requirement for a down payment to help veterans save money for other expenses like car insurance.

Does VA Disability Qualify as Income for a Car Loan?

As you apply for loans, you might notice that most applications require proof of income. Lenders want to see that you make a certain amount of money to ensure you can make monthly payments on time. Income requirements for military auto loans tend to be more forgiving not only to make loans accessible but also because the APRs are lower. However, you still need to make enough to qualify.

Veterans might find it difficult to provide adequate proof of income. Perhaps you’re unable to work because of a service-related injury or are living off sources of income that lenders don’t consider income. The good news is that VA disability qualifies as income for a car loan. Presenting proof of your disability checks to lenders makes it easier for you to meet their minimum income requirements.

Other Programs That Help Veterans Afford Cars

If you find it difficult to qualify for a loan or can’t afford a vehicle even with financing, consider seeking help from a charitable organization. Several programs thank veterans for their service by helping them afford cars. Here are a few programs that you might consider reaching out to:

Keys to Progress

Progressive hosts its annual Keys to Progress giveaway every November. Since 2013, the insurance company has helped military members and veterans by donating cars during the one-day giveaway event. Employees from across the country coordinate this day by selecting vehicles to donate, organizing fundraising activities, and organizing memorable giveaway ceremonies. The goal is to provide reliable transportation so veterans can more easily navigate other burdens ranging from health problems to unemployment.

Keys to Progress usually starts accepting applications in May. Many documents are necessary to enter the giveaway, so try to start as early as you can. Recipients typically hear back from the organization by September 30.

TrueCar Military

TrueCar Military serves active duty service members, veterans, and their families by helping deserving recipients get back behind the wheel. Its DrivenToDrive program provides veterans with retrofitted vehicles, though other programs support veterans in different ways. For instance, TrueCar customers can enjoy bonus cash ranging from $500 to $2000 from select manufacturers. They can also claim up to $4000 in repairs and auto deductible reimbursements. Additionally, TrueCar offers a dedicated military hotline to ensure service members and veterans get exceptional customer service.

Cars 4 Heroes

Cars 4 Heroes is yet another organization that provides free basic transportation to military members and veterans. Every year, the nonprofit awards hundreds of donated vehicles to deserving families.

Afford a New Car With Military Auto Loans and Other Types of Funding

Transitioning back to civilian life can be a challenge, but military auto loans are readily available as an essential part of your support system. This accessible lending is obtainable through several credit unions, banks, and even dealerships that offer veteran discounts. Regardless of the lender you choose, you should be able to get flexible terms even if you have poor credit.

Those who can’t qualify for a military car loan or can’t afford a new car even with financing might turn to charitable organizations or federal disability benefits. As you can see, getting a new car after serving your country isn’t as impossible as it might seem. Various programs exist to help you afford the convenient and reliable transportation you deserve.

Headshot of Elizabeth Rivelli

Finance & Insurance Editor

Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. She has extensive knowledge of various insurance lines, including car insurance and property insurance. Her byline has appeared in dozens of online finance publications, like The Balance, Investopedia,, Forbes, and Bankrate.

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