On January 29, 2025, the CFPB published a report showing that United States servicemembers pay higher costs and face greater financial risks than civilian borrowers when taking out credit to buy a car. The report examined over 20 million auto loans from 2018 to 2022, revealing that servicemembers tend to have larger loans, smaller down payments, and higher monthly costs.
Key findings in the report include:
Servicemembers borrow more while putting less down. Servicemembers borrowed an average of $39,000 for new vehicles, which is $2,200 more than civilians, and made down payments about $1,100 lower. For used vehicles, they financed $27,500 on average, nearly $400 more than civilians.
Military borrowers pay higher rates over longer terms. Servicemembers paid average APRs 0.6 percentage points higher than civilians and had longer loan terms. As a result, their monthly payments for new vehicles averaged $644, about $20 more than civilians, adding nearly $1,300 more over the life of the loan.
Add-on products, including GAP products, increase costs further.More than 70% of servicemembers bought add-on products, paying about $140 more than civilians. Warranties, service, and maintenance plans were the most common and costly. GAP products were the second most popular, and their purchase by servicemembers rose sharply in 2020 after the Department of Defense changed its interpretation of the Military Lending Act.
Read the CFPB’s press release here.
The full report can be found here.