Hello, I was looking into using the career starter loan that USAA or Navy Federal offers. I’m currently in debt with a car at 33 thousand dollars with a 11% APR. The loan is 25 thousand at 2.99%. Should I get the loan and just pay the difference so I can just pay on the starter loan?
Career Starter Loan
byu/AdditionalArcher380 inMilitaryFinance
Posted by AdditionalArcher380
5 Comments
Either that or sell the car. 11% is atrocious
Did you get this vehicle before your commission/entry to active duty? If so, you can utilize the SCRA to lower the interest rate of that loan. If not, that’s probably your best bet to get rid of that bad car debt. You don’t want to enter officerhood with a 11% interest car loan lol. Bad example to junior enlisted. So that’s what I’d use that CSL for
RIP to money, the real question is, is it a good ole american V8? haha
Carmax? Either way, hold off on using the career starter loan to pay off the car early.
If you got the car loan BEFORE your active duty entry date (whatever your first day of active duty was), then you’re eligible for the SCRA “Servicemembers Civil Relief Act”. If you call your loan holder and tell them that, they should be able (read: are required) to lower your interest rate to ~6% which is the point at which it typically isn’t worth paying off earlier since the average market return on investments is ~7%.
I still recommend taking the career starter loan though. Literally take it, put it into a HYSA with 4.25% yield, and make free money for literally no risk.
Also, when you PCS to your first base, you’re eligible to get a pay advance equal to one pay check that gets automatically repaid over the course of 12 months. This is effectively a 0% interest loan. I also recommend taking that.
BIG CAVEAT
*DO NOT TAKE THESE LOANS/ADVANCES UNLESS YOU HAVE THE DISCIPLINE TO JUST LEAVE THEM ALONE IN THEIR HYSA’s*
Minimally, apply for the SCRA for your car tho.
That loan ain’t gonna save you, brotha. Sell the car.