Guide to military loans

Preying On Those Who Serve The Military Payday Loan Trap

Payday loan outfits are an endemic sign of a bad neighborhood they’re there to sell loans to people with limited income, at horrifying interest rates and awful terms. When they’re placed in rough neighborhoods, they’ve usually got barred windows, and slick ads about helping someone out of a tight spot.

When they’re put near military bases, the bars go off the windows, and the dcor turns into something a bit more patriotic. After all, there are all these fine young men and women in the service, most of them under the age of 20, with a steady paycheck, living away from home for the first time. These service providers give out military loans, and aside from the color of the bunting on the place, they’re as predatory as the outfits that run in lower middle class districts of urban centers.

Now, we’re not saying that loans to military personnel are bad. Everyone has financial troubles, especially if they have a gap in paychecks, or havn’t accumulated any savings yet. Even more so, most military personnel are young, don’t understand the power of savings, and are making both more than they’ve ever made before, and a terrifyingly small amount of money given what they do for a living (though getting free room, board and health insurance gives them more spending power than they might otherwise think.) However, sensible military loans are offered by base credit unions and reasonable and responsible financial services institutions.

It’s the military personal loans and the military payday loans that wreak havoc on the life of military personnel, who have one of the highest incidences of declared bankruptcy in their age demographic. If you’re going to get a loan, talk to your bank. Again, your local bank or base credit union will be quite happy to make loans to military personnel.

Here’s the difference between a military personal loan and a military payday loan. A military personal loan will usually be for a smaller amount, and you’ll have to explain what the loan is for. It will be for a fixed amount of money, and it will have an interest rate that ranges from 12 to 18% per year, with a fixed payment schedule for when it’s due. A military payday loan won’t ask you why you want it; all they care about is when your next payday is due. It will usually be for a smaller amount, and you’ll have to pay about 20% over what you borrowed in 10 to 21 days. The difference between 20% payable every 10 business days and 18% per year is easy enough to explain the first one translates into an interest rate of 472%(!) per year. Even worse, most of those military payday loan places will try to secure the payment by asking for something as collateral, like a car or jewelry.

If you’re in the military and short on cash, take a moment to stop and think about it before signing your future away with a payday loan. Stop, work out what you’re spending, work out what you’re taking in, and build a budget. Yes, being in the military means long hours for horrible pay; it doesn’t have to mean being a sucker for a payday loan outfit.