Military Loans vs. Payday Loans

These days there’s a lot of information floating around about payday loans versus military loans. Here’s what you need to know about both products:

A payday loan is a short-term loan, cash loan. Normally, the consumer writes a post-dated check for the amount of the loan plus an interest fee. The lender then cashes the check at the pre-determined due date (which does vary, but usually around 14 days). Cash loans are fairly easy to qualify for; you need to be at least 18 years of age, a U.S. citizen, and be able to provide proof of employment. And, the benefit to this type of loan is that there’s no credit check required!

A military loan is explicitly designed for military service members. Therefore if you’re not serving in the US military and have not served in the past, you will not qualify for this type of loan. Military loans are categorized into several types: home leave assistance loans, bereavement loans, convalescent leave loans, and help loans. Depending on your individual situation, any one of these may be better suited for you. A help loan is probably the most comparable to a payday advance. Help loans are one-time, non-rollover loans for $500.  These have fixed-rates and four equal monthly payments.

Military Loans and Predatory Lending

Question: Are military loans considered predatory cash loans?

Answer: Not necessarily. Predatory lending happens when a financial institution offers loans with triple-digit interest rates, applies excessive administration fees, or deceives the borrower with the intent to gain profit.  So, any type of loan can be deemed predatory.

Question:  Are military loans classified as subprime?

Answer: They can be. Several military lenders offer subprime loan products. However, they’re not always considered subprime (subprime loans are designed as loans for bad credit). Often times, military loans are not categorized as subprime. Rather, military loan products were developed as a benefit to the men and women serving our country.