What a VA auto loan is and who can use it
A VA auto loan is a loan backed by the Department of Veterans Affairs that lets you borrow money to buy a car, truck, or motorcycle. The VA does not lend the money itself — a bank, credit union, or auto lender does — but the VA guarantees a portion of the loan, which means the lender takes less risk and can offer you better terms than you might otherwise get.
You can use a VA auto loan to buy a new or used vehicle, to refinance an existing auto loan, or to buy a manufactured home. The vehicle must be for your personal use, not for business or investment.
To be may be able to access, you must have served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard, or in the Reserve or National Guard under certain conditions. You also need a Certificate of may be able to access from the VA, which proves your service record. Surviving spouses of service members who died on active duty or from a service-connected condition may also be may be able to access.
Key Takeaways
- VA auto loans are backed by the Department of Veterans Affairs but issued by private lenders like banks and credit unions, not by the VA directly.
- You do not need a down payment, and the VA does not set a limit on how much you can borrow for a vehicle purchase.
- You must obtain a Certificate of may be able to access from the VA before you can use the benefit, which you can request online through VA.gov.
- Interest rates and loan terms vary by lender, so comparing offers from multiple banks and credit unions can save you money.
- The VA may provide means lenders are willing to offer loans to borrowers with lower credit scores or shorter credit histories than they normally would.
How to get a Certificate of may be able to access
Before any lender will offer you a VA auto loan, you need proof that you are may be able to access. This proof is called a Certificate of may be able to access, or COE. You can request one online through VA.gov without leaving your house, and the VA will usually send it to you within a few days.
Go to VA.gov and sign in with your Login.gov account, or create one if you do not have one. Once signed in, look for the option to request your COE. You can also mail a form called the VA Form 26-1172 to your regional VA office, but the online method is faster. If you served before the internet existed or have trouble accessing the online system, you can call the VA at 1-888-442-4551 and ask them to mail you a COE.
The VA will ask for your service dates, discharge status, and Social Security number. If you were dishonorably discharged, you will not be may be able to access. If you received a discharge other than honorable, the VA will review your case individually.
Finding a lender and comparing loan offers
Once you have your Certificate of may be able to access, you can approach any lender — a bank, credit union, or auto dealership's finance department — and tell them you want to use your VA auto loan benefit. The lender will verify your COE with the VA and then make you a loan offer.
Interest rates and terms vary widely between lenders, so it is worth getting offers from at least three different places. A credit union often offers lower rates than a bank, and some credit unions specialize in VA loans. You can also get pre-approved before you shop for a vehicle, which tells you how much you can borrow and locks in an interest rate for a set number of days.
When you compare offers, look at the interest rate, the loan term (how many months you have to repay), and any fees the lender charges. Some lenders charge an origination fee or a processing fee; others do not. The VA does not allow lenders to charge you a funding fee on a VA auto loan, so if a lender mentions one, that is a red flag.
Down payment and loan limits
One of the biggest advantages of a VA auto loan is that you do not need a down payment. You can borrow the full purchase price of the vehicle, whereas most conventional auto loans require 10 to 20 percent down. This makes it easier to buy a car without saving up a large lump sum first.
The VA does not set a maximum loan amount for a vehicle purchase. The lender decides how much they will lend you based on your income, credit score, and debt-to-income ratio. In practice, most lenders will lend you enough to buy a vehicle in the $30,000 to $60,000 range, though this varies by lender and your financial situation.
If you are buying a used vehicle, the lender may require that the vehicle pass an inspection or meet certain age and mileage standards. These rules vary by lender.
Interest rates and what affects them
VA auto loan interest rates are not set by the VA — they are set by the lender you choose. The rate you receive depends on your credit score, the length of the loan, the age and type of vehicle, and current market conditions. Because the VA guarantees the loan, lenders are often willing to offer lower rates to borrowers with credit scores below 620, which would normally disqualify them from a conventional auto loan.
Rates change daily and vary between lenders. A bank might offer 6.5 percent while a credit union offers 5.9 percent for the same borrower. Shopping around for the best rate can save you hundreds or thousands of dollars over the life of the loan.
The loan term — whether you repay over 36 months, 60 months, or 72 months — also affects your rate. A shorter term usually comes with a lower rate but higher monthly payments. A longer term spreads the cost over more months, lowering your payment but increasing the total interest you pay.
Refinancing an existing auto loan with a VA loan
If you already have an auto loan from another lender, you can use your VA benefit to refinance it — that is, take out a new VA loan to pay off the old one. This can lower your interest rate, reduce your monthly payment, or shorten the loan term.
To refinance, you still need your Certificate of may be able to access. You then approach a lender, tell them you want to refinance your current auto loan, and provide them with the payoff amount from your current lender. The new VA loan will pay off the old loan, and you will make payments on the new one instead.
Refinancing makes sense if current interest rates are lower than the rate on your existing loan, or if your credit score has improved since you took out the original loan and you now may have access to for a better rate. Some lenders offer VA refinance loans with no closing costs, which means you save money when ready.
Using a VA auto loan to buy a manufactured home
You can also use your VA auto loan benefit to buy a manufactured home — a factory-built home that is transported to a permanent site. The process is similar to buying a vehicle: you get your Certificate of may be able to access, find a lender who offers VA manufactured home loans, and compare offers.
Manufactured home loans typically have longer terms than vehicle loans — often 15 to 20 years — because the home itself is more expensive. Interest rates are usually lower than auto loan rates but higher than mortgage rates for site-built homes. You do not need a down payment, just as with a vehicle purchase.
Not all lenders offer VA manufactured home loans, so you may need to search specifically for lenders in your state who do. The VA website has a list of lenders by state.
Frequently Asked Questions
Can I use my VA auto loan benefit more than once?
Yes. Once you have used your benefit to buy a vehicle, you can use it again to buy another vehicle, refinance a different loan, or buy a manufactured home. You do not lose the benefit after one use. However, if you still owe money on a VA-backed loan, some lenders may limit how much they will lend you on a second loan.
What if my credit score is very low?
VA auto loans are designed for borrowers with lower credit scores because the VA may provide reduces the lender's risk. Many lenders will work with credit scores in the 500s or 600s, whereas conventional auto loans often require 650 or higher. You may pay a higher interest rate, but you will still have options that a non-veteran with the same credit score might not have.
Do I have to buy the vehicle from a dealership, or can I buy from a private seller?
You can buy from either. Many people use VA auto loans at dealerships, but you can also use the loan to buy a used car from a private seller. The lender may require an inspection to confirm the vehicle's condition and value, especially for older or high-mileage vehicles.
What happens if I want to pay off the loan early?
Most VA auto loans have no prepayment penalty, which means you can pay off the loan in full at any time without owing extra fees. This is different from some conventional loans. Check with your lender to confirm they do not charge a prepayment penalty before you sign the loan agreement.
Can my spouse or family member use my VA auto loan benefit?
No. Your VA auto loan benefit is tied to your service record and your Certificate of may be able to access. A spouse or family member cannot use your benefit. However, if they are also a veteran or a surviving spouse of a veteran, they may have their own may be able to access and can request their own Certificate of may be able to access.