Military Personnel’s Quick Guide to Navigating Financing Options

Sgt Elicia Ritter — Mon, 27 Jun 2016 12:15:15 -0400

Have you ever had an unexpected or emergency purchase? Have you tried to finance it? There have been times in my life when this wasn’t an option. Whether it was living paycheck-to-paycheck on an enlisted salary or my struggles qualifying for affordable credit without any credit history, I have had to consider using expensive financing alternatives.

If you are considering financing a purchase, realize that not all financing options are created equal. Some include high interest, high fees, or high prices. Listen to my advice, and you can better navigate your credit options and avoid surprises that threaten your financial stability.

Here are my tips about the four primary financing options military personnel can access to make a large or unexpected purchase—e.g. furniture, kitchen appliances, TVs, electronics, strollers for new baby, etc:

1. Payday Loans: Highly risky. Avoid this option. They can easily lead to a circle of debt. If you take a $500 loan, you typically need to pay $600, and the chance of having $600 available on your next payday to meet the payday loan is unlikely. If you cannot pay it back, the amount you have to pay back gets higher and higher. If they have to roll the $600 into the next payday, they will likely owe $720 or more. It’s easy to see how you may find yourself in an unrelenting “circle of debt.”

Tip: Read the fine print. Make sure you know what the terms of loan are, when the loan needs to be paid back, and what the cost is to roll over the loan to the next pay day.

2. Rent-to-Own: Although you get manageable weekly payments for furniture, renters can end up paying four times the retail amount for a product, and the penalty for a missed a payment is often repossession.

Tip: If you need to rent furniture after a move, it may be worth renting furniture for a couple weeks. Make sure you calculate the weekly payments until the rental contract’s end date, since it will probably dissuade you from taking the contract to term.

3. Credit Cards: Unless you pay off your balance in full every month, every time you use the card, you pay interest on the stuff you purchased from the moment you purchase it. Add a large expense to the card, and you’ll find yourself with a balance that is hard to pay off.

Tip: Make sure you know your interest rates on each of your credit cards and pay off the one with the highest interest rate first. If applying for credit, make sure you read the fine print for interest rates, annual fees, and potential penalties.

4. Savings & Credit Safety Net: Although it sounds like it could be a credit card, a credit safety net is there when you need it and always offers 0% APR, helping you save on typical financing fees. It stands firm in never charging interest or fees and has zero associated gimmicks. By paying over time for purchases at no added cost, users avoid revolving debt and accruing interest that comes with credit cards or other financing options.

Tip: Check out Zebit. It is a new savings and credit safety net that offers $1000 interest-free credit without a credit check to active and retired military. Its responsible credit can be used to make purchases in the Zebit Market, featuring thousands of brand name goods and services at retail prices. If your refrigerator breaks or you need a mattress like I did when I decided to move off base, rather than financing it at a high interest rate, you can shop at Zebit and pay it off over time at no additional cost above retail. Since there is a guarantee of no interest ever, you don’t rack up credit card debt and accruing interest, saving you a ton of money in the long term and you can feel a lot less stress in the short term. If I had access to this option when I was enlisted, I would have slept a lot better at night knowing I was financially secure. Here’s the site if you’re interested: http://rly.pt/zebit-military

The next time you come into a situation where financing is the only option, I hope this advice helps you respond to emergencies, unexpected purchases, and costly life events more responsibly.

Military | Zebit

All active and retired military are pre-approved for $1,000 interest-free credit at Zebit.

Response by SSgt Robert Marx made Jun 27 at 2016 12:22 PM

SSgt Robert Marx — Mon, 27 Jun 2016 12:22:59 -0400

I advise waiting a while until you are able to make a purchase without having to pay sky high interest. I personally had needed a car when I was an e-3 a few years back. I thankfully did not get saddled into a multi-year contract. I got a loan for about 1 year that I was able to pay off and be done with it. The stupid loan company sent me a letter about keeping my allotment going and saving for my next car purchase. I pulled the plug on the allotment soon after receipt of that letter.

Response by PO1 Private RallyPoint Member made Jun 27 at 2016 12:27 PM

PO1 Private RallyPoint Member — Mon, 27 Jun 2016 12:27:11 -0400

When unexpected life changing things happen (like having a child), I took advantage of the Fleet and Family Services. They provided me a baby classes based on a budget (they gave me some great goodies like a onesie for newborns, blanket, bag, coupons galore, etc. It help me figure out how I was to manage with having an E3's salary, currently financial obligations and having a baby. Also with being on a budget I used WIC for about 8 months after my son was born; he needed formula and that stuff isn't cheap. WIC covered an X amount of cans of formula, baby food and good nutritious food for you and your family. It didn't cost me anything, just had to qualify based on my family's income.

Also Fleet & Family Services had other options available too. If you needed to have a pay loan but would have to pay back when you got the money, they can do that for you. They can give you the amount you need ( I think it's like a $1000 cap, idk) but they will loan that out to you, no questions asked and when you pay day comes, they can either have them take it out of your check or you can pay them directly. I never used the service but I heard good things about it from others.

I don't know if the Air Force and Army has a program like Fleet & Family, but it has helped me and a few other shipmates when they were in a bind.

Yes, I did use finance cards but I didn't put the max on them....I would usually pay more than the monthly so if I was in a bind I could pay the minimum or pass the month with the accumulated amount I've paid previously.

I've learned a lot of ways to help myself benefit when I'm in a bind along with services that the military provided.

Response by Capt Tom Brown made Jun 27 at 2016 1:46 PM

Capt Tom Brown — Mon, 27 Jun 2016 13:46:46 -0400

The company gets it's money back from SMs through some sort of a payroll deduction system in which they get their cut right off the top. They make their profits by buying goods wholesale and selling them to you at a marked up price and keeping the margin