USAA Debt Consolidation Loan Review

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Dan Steadman

Financial Advisor, DCL

USAA Debt Consolidation Loan ReviewHow Can Debt Consolidation Help You Out?

Are you feeling overwhelmed with bills? Are your credit cards maxed out? Are you considering filing for personal bankruptcy? If you answered yes to any of these questions, then getting a debt consolidation loan just might be the solution you have been searching for.

The way that a typical debt consolidation strategy works is that you combine all of your existing loans into a single loan on which you make monthly payments. The major appeal of a debt consolidation plan is that you will not have the stress of worrying about how to juggle a long list of separate monthly bills. Instead, you can make consistent payments on a single amount. This also makes it less likely that you will accidentally forget to make a payment one month and incur expensive late fees and charges.

One of the things that you should be aware of when you consolidate your debt using a personal loan is that you might end up paying a higher interest rate on the personal loan than on some of the individual monthly debts. You will need to balance this against the principal amounts of those debts to see if you would be spending too much money on interest for the convenience of only having one monthly payment to worry about.

One of the fastest ways to obtain a personal loan is through the USAA. If you are a member of the USAA, you should consider calling them and apply for a loan.

Is USAA a Good Choice for a Personal Loan?

The United Services Automobile Association, or more commonly called USAA, is a diversified financial services group, based in San Antonio, Texas. It started out with 25 U.S. Army officers who created a mutual self-insurance service because they wanted to have insurance at a lower rate. At the time, U.S. servicemen were being charged higher auto insurance premiums because of the supposed higher risk as military personnel.

USAA membership is restricted. In order to become a member of the USAA, you must be:

— active members or veterans of the U.S. military;

— spouses, including widows, widowers or former spouses, of USAA members;

— children of current or former USAA members;

— former USAA members;

— depending on the federal government agency, their employees may also qualify for membership. You would have to call USAA membership services if you are qualified.

Whether it is insurance or personal loan, the USAA does almost all their business over the phone or via email. They do not have agencies nor independent agents do their insurance selling. All the selling is done by USAA employees. Since they do their business over the phone or through the internet, they have the capability of processing loans much faster than traditional financial institutions or lending facilities.

USAA offers a simple online application for taking out a personal loan and generally receives positive reviews from its members. The advantage of this option is that you will get a decision much faster than having to go to a USAA branch location in person in order to submit a personal loan application. There also is no fee for applying for a personal loan from USAA. If you are approved by USAA, then you can expect to receive your funds as soon as the next business day. This means that you will be on the road quickly to putting your financial worries behind you.

On USAA’s website, you will find useful tools for figuring out whether a personal loan for debt consolidation makes sense in your case. You will be able to compare interest rates for your current credit cards against what you would potentially pay for a personal loan. Your credit score will help determine the interest rate that you qualify for, so you may want to have an idea of your credit score before you start the application process.

In order to qualify for a personal loan from USAA, you must be able to show that either you or your eligible family member served in the armed forces. If you are currently an active military member, then you will have no problem meeting the eligibility requirements to bank with USAA. You can find out whether you meet the USAA eligibility criteria by clicking here.

Keep in mind that you will not be hit with a penalty for paying off a personal loan from USAA early. If you are able to take advantage of a lower interest rate and can direct more of your payment to the principal amount, you may find that your debt will vanish quicker than you expected.

USAA charges interest at 8.99% APR and higher, and it also includes a 0.25% discount if you autopay. You can choose your payment period of up to 72 months. You can still get good interest rates even if you have 60-month loan term, provided that you have an excellent credit score.

The only disadvantage, if you may call it that, of a USAA loan is that you have to be a member of the organization, which means that you are affiliated with the military in one way or another, or be a member of one of a few government agencies. Against this supposed disadvantage is the quick loan processing which can be done online. You can have your loan approved in minutes.

Additional USAA Loan Benefits

On top of the loan, there is an optional loan payment insurance called the USAA Debt Protection. It has an additional fee but covers you for any surprise instances that happen when you can’t make the monthly payment. The plan covers death, disability and unexpected unemployment. Debt Protection rates varies on your payment plan and the principal balance. When you sign up for Debt Protection, the additional fee is added to your loan.

When you have a USAA personal loan, you are given all the chances to pay. Late payment has a grace period of 15 days. During this period, you can pay your monthly dues without any additional interest or penalties. If you pay after the grace period, the late fee is 5% of the payment due. If you pay past the due date, this is reported to the credit agencies after 30 days. For returned check, fees vary according to the individual rules of the bank. When you apply for a loan, there is no application fee. Unlike other loan facilities, there is no additional fee if you pay for the loan in advance of your payment schedule.

With a low late penalty, relatively lenient grace period, and a quick approval, a USAA personal loan is highly recommended if you want to quickly settle or consolidate your debts from various sources.

Distinct Advantage of a USAA Personal Loan

The corporate structure of the USAA is different from most lenders or financial institutions. It is an inter-insurance exchange. The members insure each other, and as a group, the members own the company. Which also means that the premiums for the year are used to pay for any claims. It is not a for-profit organization, and USAA returns a portion of the year’s profits to the members. USAA has a formula for returning excess payments, and retaining for the company’s financial strength.

A conventional insurance company is usually incorporated and has shareholders. The amount it collects as premium is invested by the company. The premiums are computed to include the probability of a claim during the year, as well as the percentage of the premium which should go into investments, and their corresponding expected returns. In case of any insurance claims, the claims are paid from the interest earnings from the investments. Any excess claims are paid from the principal invested. Due to the nature of the business, insurance companies strive to sell more insurance, and collect more premiums than the expected claims for any given year. The investment portion of the insurance also ensures that the company has a buffer in case there are more payments than collections. Because of concerns that an insurance company might fail to pay off its obligations, the insurance industry is highly regulated.

The USAA as an inter-insurance exchange based in Texas, adheres to the Texas Insurance Code, which allows for the company to be owned by the members, but not as shareholders. Their membership itself allows them to benefit from the company’s returns. In addition, in case of any losses, the members are only liable to the extent of their premiums or premium deposits.

The USAA has a bank which handles the banking facilities, including deposits, investments and loans. the USAA Federal Savings Bank has only one full-service branch, located in San Antonio. It has financial centers located in other cities which are usually close to military bases. In 2015, it reported that it had 6.3 million accounts with deposits totalling $62.549 billion. It was the 28th largest bank in the world.

The above distinction is necessary to understand that the personal loan from USAA is an investment from the insurance business. This also helps explain why the USAA has been able to do business without any direct sales personnel. Their business model fits that of the internet in that they are able to have a relatively low interest rate for loans, as well as to approve loans in minutes all through accessing the internet or via a single phone call.

Debt Consolidation with the Use of a USAA Loan

For debt consolidation, the first part is to have a lending company provide you with a loan, followed by a strict repayment scheme. The loan is necessary to have all your debts under one lending facility, with a single interest rate. The repayment scheme and necessary personal loan management is vital to ensure that you are able to repay your loan.

If you are a member of USAA, and you have a good credit standing, you can avail of a relatively large loan value. This will be used to repay your debts. However, unlike other debt consolidation options, you will have to do this manually. The USAA will not be able to help you beside providing the money. Remember that the purpose of the loan is for debt consolidation and once you get the USAA loan, you have to repay your other loans immediately.

The second part of the debt consolidation scheme is a concerted effort to repay the USAA loan. Due to opening a new loan, your credit rating will experience a dip. You will have to repay the loan before your credit rating goes up again. You will also have to watch your finances, and pool all your resources in meeting the monthly payments. This will not be easy because you do not have an intermediary between you and USAA. This is a personal loan and they expect you to repay it on time.

Unlike other lending institutions, the USAA is relatively lenient with late payments. The grace period is 15 days which is more than enough time to allow you to pay your monthly dues. The late fees are also affordable, being based only on the monthly payment. In addition, you have up to 72 months to repay the loan. In contrast, other loan facilities only allow from 3 to 5 years repayment. If you can, it is advisable to repay the loan in a shorter time with larger payments when you are able. Doing this will also result in lower total interest payments.

Since there are no intermediaries, there is only the consolidated loan to repay. This also puts all the responsibility on the shoulders of the debtor. There are no signed agreements outside of the loan itself. Getting a loan from USAA for debt consolidation is the simplest and most straightforward way to repay your debts. However, the simplicity means that you would have to do all the work, and there will be no debt negotiation or amnesty, unless you talk to your various lenders before making the USAA loan.

Dan Steadman

Dan Steadman

Financial Advisor, DCL

Dan is one of the top financial experts when it comes to debt consolidation. With more than 20 years of experience helping people tackle debt, he has a unique insight when it comes to solving debt-related problems. 

Dan got his start when he went to work for a bank after getting his Business Degree. He worked his way up and became a loan officer. This position gave him unique insights into the ways that financial products work and how people can utilize different financial products to improve their lives. He’s seen hundreds of success stories and just as many failures – so he knows what steps are most likely to help his readers.

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