Bad Credit Auto Loans for Veterans

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - December 20, 2018

You don’t have to be on active duty to get a military auto loan, and, sometimes, you don’t have to have good credit, either. The trick is to find the right dealer or lender.

Car Loans for Veterans

Because veterans aren’t active duty, they aren’t going to qualify for an active duty car loan. Similar to traditional auto loans, active duty car loans are designed for military personnel and offer unique discounts and deals. If you want an auto loan and you’re a veteran, you may need to do some digging to find a discount or deal.

Some manufacturers offer year-round discounts for veterans, while others stick to military holidays such as Veterans Day or Memorial Day. It all depends on the manufacturer. In addition, the type of deals and discounts you might get also rely on your credit score.

If you have good credit, you can walk into just about any dealership, mention that you’re a veteran, and ask what they can offer you. If you have bad credit, it isn’t going to be as easy. In this case, you probably need a lender that offers subprime auto loans. If you’re turned down for one of these car loans, the next best option is to find a guaranteed military auto loan offered by in-house financing dealers.

Benefits of Military Car Loans

In order to qualify for a military car loan – veteran or active duty – you need to show the lender your military ID or your DD 214. Other than that, the items you need to bring in to show the lender such as a valid driver’s license and your LES or proof of income, are the same. Besides the military discount, military auto loans can come with additional benefits including:

  1. Easier approval odds
  2. Lower interest rates
  3. Flexible payment plans
  4. Lower down payments

Breaking a Car Lease While in the Military

If you’re a member of the armed forces and you currently have a car lease, what happens if you’re deployed or forced to move? Luckily, the Servicemembers Civil Relief Act (SCRA) allows you to cancel your lease without paying early termination fees as long as the servicemember (or their dependents) use the vehicle for personal or business transportation, according to legal website Nolo.

Specifically, military personnel can terminate a car lease signed before they entered active duty if they enter the service under a call or order of at least 180 days, or they have orders for a shorter period of time that extend to at least 180 days.

If you sign a lease during active duty, you can break it if you receive orders for:

  1. A permanent change of station outside of the US (including Alaska or Hawaii)
  2. A permanent change of station from Alaska or Hawaii to another location outside those states
  3. A deployment of 180 days or more

To break the lease, make sure you write a termination notice and include a copy of your military orders to give to your lessor. Once those are sent, you have 15 days to return the vehicle, and the lease is terminated.

Ready to Find Financing?

CarsDirect is your trusted resource for automotive research and expert car pricing insights. Check out this month’s latest new car deals or view our guide to automaker’s military discounts. If you’re in a car buying rut, and don’t know where to turn, we want to help. At CarsDirect, we help buyers get connected to a local dealership with the lending resources to handle various credit situations, including bankruptcy. To get the process started, simply complete our auto loan request form. It's free of cost and obligation.


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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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