Hey everyone I’m a new 2LT, and I had been thinking about using the USAA starter loan to get a car and also pay some debt (it’s a small amount). My question for everyone that has taken it before or just everyone in general is if it’s smart to take this loan even tho I have around $10K in stocks. I would rather not sell them as they are good future companies like Tesla, Apple and this kind of stocks. Would it be smarter to take the loan and by a reliable car between $10-15k or should I just sell my stocks and use that money and whatever else I have saved for it? I’m looking for different points of view so thank you.
Advice on the USAA starter Loan
byu/Elbichocr7siuu inMilitaryFinance
Posted by Elbichocr7siuu
2 Comments
From what I remember, the career starter loan is very low APR. It was basically free money. You will be very hard pressed to find a similar interest rate loan ever again. Just don’t mismanage what you are doing with the money. An affordable and reliable vehicle you’ll have for 10-20 years isn’t a bad use for it. Using it to supplement your income while loading up on your TSP the first year is another interesting idea.
Take the loan if you still can (I think you have to be within a year of commissioning).
Look at Navy Federal Career Kickoff Loan to compare terms and interest rate. Similar to USAA’s Career Starter Loan.
Usually 2.99% if you are OCS or ROTC and 0.75% if you are military academy graduate.
Best interest rates you’ll ever get in your life. Take the loan, buy the car, invest the rest of the loan in a total stock market index fund. Make payments from your normal paycheck until the loans paid off. Pay it off early if it annoys you, like it eventually did for me.
You could also just take the full amount, buy the car, and then pay back whatever’s left over so you’ll have a super low loan and low interest rate. Then just make extra payments and be done with the whole thing in a year or 2.
Also, why are you picking individual stocks? Have a read of JL Collins Simple Path to Wealth, Jack Bogle’s Little Book of Common Sense Investing, or Malkiel’s Random Walk Down Wall Street. Stock picking is a loser’s game in the long run.