Active duty members serving in any branch of  the U.S. military can get a special deal on a loan, thanks to something called the The Servicemembers Civil Relief Act, which caps loans at an annual percentage rate of 6%, and also prevents foreclosure on the homes of military personnel.

The Act also applies to all loans a service member might have – credit card loans, car loans, or any other “debt incurred” by someone in the military full-time. Most military loans are made up to a limit of $20,000. Military loans are also extremely flexible. You can use the money for just about any need you have – home repair, debt consolidation, buying a car, and so forth.

Who will give you a military loan? Is this something that is run directly from inside the military? No, you can get a military loan from any bank, including wherever you currently do your banking. All you have to do is show proof that you are an active duty full-time member of the military.

However, banks are under no obligation to grant you a military loan. You can still be turned down. There are basically two kinds of military loans: Secured and unsecured.

Lenders prefer making secured loans, of course, because they are backed up with some form of collateral. That’s most often a home or car. A secured loan is easier to get if you have the collateral, and you may also get a lower interest rate and a longer repayment schedule.

Unsecured loans are much more difficult to get for obvious reasons. A lender must be willing to grant you a loan based on your signature and your promise to pay it back. They’re not impossible to get, but few nervous bankers these days are interested in making unsecured loans, even to those with good credit and a steady military pay check.

What if you have bad credit? Can you still get a military loan? The answer is yes, but here again you are again in “secured loan territory.” You’ll definitely need a rock-solid form of collateral, and maybe even a co-signer to get a military loan if your credit rating is not up-to-snuff.

Anyone who goes online and searches for military loan providers will quickly find dozens of entities that make military loans, and many of whom say they specialize in this form of lending. However, just because all military loans are capped at 6% annually does not mean that all loans are a great deal. Lenders are good with the fine print. That means you need to examine the terms of each lender and their offers carefully. Some will make you a much better deal than others.

But even more important: Some clever, less-than-scrupulous lenders disguise themselves as “military loan” specialists, but the only thing “military” about what they are offering is in their name. For example, some lenders advertise themselves as “military loan” services, but when you read the ad copy, they often state “better than a military loan”! So they’re not really “military” lenders at all!

So a member of the military can get a loan with an interest rate far more attractive than non-military people. But remember, a loan is a loan and debt is debt – and debts need to be paid back.

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