What Is A Career Starter Loan
A career starter loan is exactly what it says. It’s a loan that will help you start your career in the military. This loan is often referred to as the car loan, commissioning loan, cadet loan, or the lieutenant-mobile loan. You can obtain this kind of loan from various financial institutions such as USAA and the Navy Federal Credit Union.
Depending on the lender, you can avail of a loan ranging from $25,000 to $35,000 with an interest rate of 0.5% to 2.99%. The length of the loan is 60 months or five years. You can take any amount of the loan up to the maximum amount and pay off the loan early if you wish. There are usually no early repayment penalty fees.
A career starter loan is a signature loan, which means that you are not required to put up any collateral. Usually, you don’t need to start paying off the loan until 6 months after your scheduled commissioning date. You can take out this loan a year before or after you are scheduled to graduate if you are an ROTC cadet. Those in the academy can usually avail of the loan in their junior year. Officer candidates generally are required to be within a few months of their commissioning date if they want to avail of the loan.
It is good to know that after serving in the army, you may get a public servants salary, which is not so high but can cover your basic needs. You may also need to take into consideration that getting an online personal loan for veterans is a solution for paying unexpected expenses.
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Navy Federal auto loans start at very low rates for borrowers with excellent credit.
Navy Federal Credit Union is not currently rated by the Better Business Bureau, because Navy Federal is in the process of responding to previously closed complaints.
How long is Navy Federal’s auto loan preapproval good for?
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My Experience Applying For The Usaa Cadet Loan
I first heard about the loan in 2008, as a sophomore in Air Force ROTC. The seniors were approaching their graduation and commissioning and were talking about the cars they were going to buy with this awesome military-only loan from USAA. I was excited. I had dreams of an awesome spring break vacation, maybe a summer trip to Europe, and buying a BMW before I reported to my first assignment.
In November 2008 I applied for and was approved for the loan. It was pretty exciting seeing $25,000 sitting in my checking account. I didnt know what I wanted to do with the money just yet, so I let it sit in there until January 2, 2009.
After discussing what to do with the loan with a Charles Schwab financial advisor and well as my father, I decided I would invest $15,000 of it into the stock market and $10,000 into a CD ladder. At the time, the stock market was crashing and CD rates were 4-5% for all ages of maturation.
While I dont believe in timing the market, I actually entered at a pretty good time. I let the money grow until my graduation in 2010. I sold my shares and used the proceeds to pay off one of my student loans which was at 6.8% interest. The $10,000 CD ladder I kept and used as the basis for my emergency fund as I entered active duty.
Now, almost 4 years after taking out the loan, Ive finally paid it down to under $10,000. I should have the remainder paid off by Dec 31, 2013, almost 2 full years early, saving me hundreds in interest.
Priority : Investing In The Stock Market

Several years ago you could have taken a chunk of the career starter loan and put it towards a Certificate of Deposit which is essentially like giving a bank a loan. They pay you interest, but you dont have access to the money for an agreed upon time. When rates were higher, you could put away money for 5-10 years at a rate greater than 3%. Unfortunately, a look at the last few years shows that rates have fallen flat and are at only 1-2%. Such an investment with the loan is a terrible idea. You are agreeing to lose money, and would be better off paying the loan back early.
Similarly to CDs, other low risk investments like bonds are also not going to work out very well for you.
This leaves stocks. Ill leave an in-depth conversation on this topic to another post. All you need to know is that you have to beat the interest rate of your loan to come out on top. The risk is that you could lose money in the stock market and be putting yourself worst off. This is a decision you need to make after doing some independent research on your options: stocks, mutual funds, ETFs, motifs, etc. The 10 year S& P 500 chart above offers some perspective on how volatile the market can be.
You will also need to decide if you want to keep your money liquid in a trading account, or invest in retirement through an IRA/401K/TSP.
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Priority : Start Your Career Free Of Credit Card Debt
Everything we have been talking about and will continue to talk about is reliant upon INTEREST. You absolutely must make decisions based on interest rates. This is key to being financially successful.
If you have credit card debt, PAY IT OFF FIRST! I dont know of any credit card out there with below a 3% interest rate, so this is going to be a no-brainer. The only exception might be if youve consolidated your credit card debt under a no interest plan over a certain term. In this case, you must make sure that your prepared to pay off the debt before the no interest term expires.
Im not going to go into a lot of detail here, but assume you have 1 credit card with a 15% interest rate . Lets also assume you managed to accrue $5,000 in debt buying pizzas and margaritas on the weekend while in college. At a 15% rate with a minimum payment of say $50 bucks, you could end up paying almost $3k in INTEREST ALONE.
You would have to be incredibly irresponsible to make only the minimum payment, but it puts things in perspective.
If you get the USAA Career Starter Loan, PAY OFF HIGHEST INTEREST DEBT!
What Is The Usaa Career Starter Loan
This is a personal loan offered by USAA Bank to selected members of the military.
The maximum loan amount ranges from $25,000-$35,000, at interest rates from 0.5%-2.99%. You can take any amount of the loan out up to the maximum and there are no early repayment penalties.
Payments are deferred until 6 months after your scheduled commissioning date. The loan is scheduled to be paid off in 5 years. For $25,000 at 2.99%, youre looking at payments of $471 per month for 5 years starting 6 months after you commission.
This is a signature loan, meaning that there is no collateral. If you dont commission, stop direct depositing your military paycheck into your USAA Free Secured Checking Account, or if you become late on your payments to USAA, the interest rate can jump to 18%. Ouch. So dont get kicked out of your commissioning program in your senior year!
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Who Isnt Qualified For This Loan
Asides from not being a military officer, the set of persons in the list below are those who shouldnt dare think of the USAA career starter loan.
- Those who fear being in debt.
- If you spend money on unnecessary things, you probably should not take the loan.
- Those who think they might not finish up their military course should also not take the loan. If they dont, they might have to pay immediately or face a higher interest rate.
Usaa Career Starter Loan
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Is the USAA Career Starter Loan a good deal for military officer cadets and midshipman? It depends on your personal financial situation and what you plan to use the loan for.
I discussed the USAA Career Starter Loan and Navy Federal Career Kickoff Loan on my podcast, The Military Money Manual Podcast. Check it out here or embedded below:
The interest rate is usually low, between 0.75% for military academy cadets and 2.99% for ROTC and OCS/OTS cadets. The amount of the USAA cadet loan is usually $25,000 to $36,000.
The USAA Career Starter loan program is offered to cadets and midshipmen commissioning through Army, Air Force, and Navy/Marines ROTC or through OCS/OTS . The terms and conditions change every year, so make sure you call or check with USAA for the most current information.
The first payment is deferred until 6 months after you commission, so if your EAD orders are delayed a bit you have that safety buffer.
In this post:
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Buying Index Funds Through A Roth Ira
If youre comfortable with not touching your money until you are 59 1/2, then you can use the Career Starter Loan to make one of the best financial moves possible. A Roth IRA is an individual retirement account where all the investments are tax free for life. The catch is that you cannot touch the money until youre 59 1/2. Roth is one type of IRA, the other is traditional. A quick look at the two:
Usaa Career Starter Loan: Know This Before You Take Loans In 2022
May 5, 2022 by esther
People think the only reason you take a loan is to enable you further your education. This isnt so in most cases as there are a variety of reasons you can take loans.
One of such loans is the USAA career starter loan. This article is a must-read for you if you want to know who is eligible for this special loan and what you can use it for.
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Down Payment On A House
If youre thinking about buying a house, the money can be used for a down payment. This can be an attractive option, because the only debt I think is smart debt is asset backed debt. I havent heard of many officers doing this, but it is an option. Just make sure you do your research on rent vs. buying in your area, especially when you know youll be moving in a few years.
What Makes You Eligible For Nfcu Membership

To apply for a Navy Federal Credit Union credit card, you also have to be an NFCU member. To be eligible for NFCU membership, you or one of your family members must have ties to the armed forces, National Guard or Department of Defense. This includes active-duty personnel, officer candidates, reservists and veterans. If none of these apply, call or visit a local Navy Federal branch for assistance.
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How To Use Your Career Starter Loan
Obviously, there are a lot of financial responsibilities you need to take care of once you graduate. And having that much money in the bank can ease the burden of just starting out. That being said, you should know how to use your career starter loan wisely in order to get the best benefits. Youll need to have a clear plan in mind before you even get the loan, which is why weve listed several tips that you can follow so you can be smart about your money.
How To Buy Index Funds With Your Career Starter Loan
Buying an index fund is simple, open a brokerage account. A brokerage account is an account used to buy stocks and ETFs. You are likely familiar with Robinhood and may already have one. Robinhood is the most well known brokerage account but it is not the only one that offers an awesome product. Its user friendly interface makes your stocks easily accessible, this can be a dangerous thing when youre trying to not touch your money. For the career starter loan investment you may also want to consider M1 finance. Heres why:
- M1 Finance will allow you to build a portfolio. Say you wanted to split your investment between VTI,VGT and VOO but wanted to weight more heavily in technology. You could set VTI and VOO to 20% each and VGT to 60%. M1 will automatically divide every investment between them with no math on your part. Robinhood will not do this. If you wanted to add some individual stocks to your investment, this is also the simplest way to do that.
- It offers a $30 sign up bonus, which is more than Robinhood. The sign up stocks I have gotten from them have never been worth more than $10. If you really wanted to max out your benefits, sign up for Robinhood and transfer to M1 to get a $30 bonus. If you already have a Robinhood you could also do this.
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Can Military Families Have Financial Problems
No military family wants to have financial problems. When they hit, it can be hard to know where to turn and what to do. Fast-cash payday lenders may seem like a good idea when you’re in a pinch, but they come with many downsides, including high interest rates and practices federal watchdogs have ruled predatory.
Who Can Use Navy Federal Credit Union
are generally more exclusive financial institutions, reserving membership and services for certain communities like a neighborhood or set of companies. Navy Federal Credit Union keeps with this model and limits its services to servicemembers, veterans, Department of Defense civilians and family members.
Servicemembers and veterans includes Active Duty members of the Army, Marine Corps, Navy, Air Force and Coast Guard, Army and Air National Guard, members of Delayed Entry Program , Department of Defense Officer Candidate/ROTC, Department of Defense Reservists and veterans, retirees and annuitants of those departments. Department of Defense civilians means if you are a civilian employee, U.S. Government employee assigned to DoD installations, DoD contractors assigned to U.S. Government installations and DoD civilian retirees and annuitants. Finally, you can qualify as an immediate family member, meaning grandparents, parents, spouses, siblings, children , grandchildren and household members. If youre unsure whether you qualify, you can always contact NFCU to determine your eligibility.
As a military-affiliated member, NFCU offers special perks like rewards and discounts. Youll have access to military pay advances, favorable banking and loan rates and easy direct deposit. NFCU also provides a Thrift Savings Plan to help you save and manage your money and offers their Active Duty Checking account, made for those actively serving.
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Priority : Buying A Car With The Career Starter Loan
Now lets talk about why you really started reading this article. You just graduated college and the old 2000 Toyota Corolla just isnt doing it for you anymore. Youve got about 20 bucks to your name, and purchasing a Tesla Model S is looking like an economical and financially responsible decision. No gas expenses, right?
More realistically, your probably looking at a Ford F150 and setting aside some cash to get a lift kit put in.
I will keep this simple. YOU CAN GET A GREAT RATE ON A NEW CAR PURCHASE!
The caveat is that you have to have decent credit, which I hope you do since your just getting out of school and starting your career. The first new car I bought with an optional 0% down, 0% interest, fully amortized over a 4 year period. The key statement there is fully amortized. Dont be fooled into some 0% down, 0% interest, for the first 12 months sales pitch. Such a loan could come back to bite you hard after those 12 months.
First, shop around at your local dealer and see what theyre offering.
Second, check with USAA or another lender to see what kind of deals they have.
Lastly, if you cant find a good deal out there you can consider using the USAA loan, but I caution you to be responsible and take care of coming expenses like uniforms and past debt first.
How I Paid Off Our Usaa Cadet Loan In Less Than 3 Years
By saving money on deployment, never paying for cable TV, increasing our income with AirBnB, and decreasing our monthly expenses by over 25%, we were able to make the final push and pay off the loan over half a year early.
We were already paying almost 75% more per month than the minimum. Every month, on top of the $471 minimum payment, we’d make an additional $304 payment. This debt avalanche saved us about $1000 in interest and cut 2 whole years off of the life of the loan. With the final epic $5000 payoff, we were able to slay the evil beat once and for all!
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