USAA Auto Loans

The Good

• Competitive interest rates
• Online application & payments
• Both new and used automobile loans plus options

USAA is known as a bank for active-duty military and veterans, but the truth is, many of their members have never served in the military.  You can read my full report on how to qualify for USAA membership, but spoiler alert: it is not as difficult as you think.   USAA began in 1922 when some army officers banded together to negotiate discounts on auto insurance.  Today, they offer insurance, banking, mortgages, auto loans, wealth planning, and more, and they employee 22,000 employees to service over 8 million members.  Those are some massive numbers.

Competitive Interest Rates

The consistent positive that you hear from members and that is generally accepted is that USAA offers great rates.  Some of the discount insurance companies have given them a run for their money on auto insurance, but for mortgages, home equity loans, personal loans, and auto loans, USAA is perceived as offering very low rates.

Online application & payments

USAA has not traditionally been known for its online experience.  Think big company and military and you probably won’t think “cutting edge web tools.”  But when we took out a loan, the web experience was actually quite good.  We were able to submit all of our information online, qualify for the loan, and then have payments automatically deducted.

Both new and used auto loans plus options

USAA offers loans for both new and used automobiles.  Typically, borrowers can qualify for a slightly lower rate with a new automobile purchase.  At the time of this writing, the lowest rate for a new auto loan is 3.09% while a used auto loan starts at 3.79%.  Loans are available for various timelines with the longest being 84 months.  Finally, they offer refinancing options.  So if you have an auto loan at a higher rate, USAA may be able to transfer your balance to its lower rate (note: typically, there is an origination fee for this).

The Bad

• May require a phone call
• Paper check to dealers

 May require a phone call

While we mention USAA’s online interface as a positive (see above), there is one issue in applying – they don’t automatically qualify you for the 0.25% discount if paying with auto-payments.  We had to call and specifically ask about it.  Other than that though, the online application process was good.

 Paper check to dealers

USAA does not offer the ability to wire transfer funds directly to dealers.  This could slow down a potential transaction by a day.  However, we don’t see this as an issue for most deals – even if highly time sensitive – because USAA does overnight the paper check. The dealers get it one business day later than they would a wire transfer. Second, many dealers do not accept wire transfers from lenders.  So the point may be moot anyway.

The Summary

For USAA members looking for an auto loan, USAA is a great option.  As with any lender, you should shop around though.  There is no impact on your credit score if multiple lenders pull your credit within a few days.