Even if low credit ratings were to a highly damaging factor in loan applications, there are always options open to individuals in need of a cash injection. For members of the military, for example, there are certain advantages to seeking loans from military lenders. But it means that getting large sums, like a $20,000 military loans, with bad credit are possible.
The advantages are chiefly to do with the excellent employment status that military personnel have, but that does not mean there is any loan approval guarantee. The benefits extend to no credit check approval processes, comparably lower interest rates and fast loan approval, but there are criteria to meet first.
Like all loans, a large military loan needs to be repaid, and the lender needs to feel confident that it will be. So, the priority is to convince the military lender that this will be the case. Of course, with the government your employer, that is not very difficult.
Why Military Personnel Get a Good Deal
Military personnel do get an excellent deal when compared to the civilian equivalent. But it is understandable when factors like job security are looked at. In essence, they are not likely to be made redundant, and their employer is not going to suddenly go bust. And with salaries paid without fail, repayments are always possible. Getting approval on a $20,000 military loan with bad credit should be no problem.
With regards loan repayments, the lenders benefit from a scheme that ensures payment every month, with the borrower not even having to remember it. Payments are made as deductions from paychecks and sent directly to the lender. In short, there is little reason for a lender to feel unsure about granting fast loan approval.
But there are other issues that can hinder the chance of getting a large military loan. If the deal is not deemed affordable, then no lender will approve the loan application.
Significance of the Debt-to Income Ratio
The most significant factor in any loan application is the debt-to-income ratio. The ratio confirms how large a repayment is affordable, and lenders everywhere adhere to its 40:60 rate religiously. When seeking a $20,000 military loan with bad credit, this is the abiding factor.
The ratio stipulates that no more than 40% of the available excess income can be used to make repayments. For example, if the total monthly expenditure is $2,000 and is taken from the monthly income of $3,000, it leaves an excess of $1,000. But repayments cannot exceed $400.
The promise of fast loan approval is not generally affected when these figures are being checked out, because the two figures are provided on the application form. But even with the advantages military personnel have when seeking a large military loan, the debt-to-income ratio can stop the deal being done.
Why No Credit Checks?
Of course, it also seems strange that credit histories are completely ignored too, especially when the applicant is seeking a large loan, like a $20,000 military loan, with bad credit. Well, since the repayments are made as deductions from the paycheck, the borrower could not fail to pay even if they wanted to. So, a no credit check policy is completely viable.
The chief purpose of a credit score now is to set the interest rate charged to the loan. But since military personnel also pose little risk, the interest rate is usually set anyway so no assessment is needed.
When the fast loan approval procedure is completed (after just a few minutes), military personnel who have a strong debt-to-income ratio can feel confident of getting their large military loan.