Consumer Financial Protection Bureau report finds servicemembers pay higher auto loan costs and buy more add-on products

The Consumer Financial Protection Bureau published a report finding that United States servicemembers pay higher costs and face greater financial risks than civilian borrowers when financing vehicles. Based on analysis of more than 20 million auto loans originated between 2018 and 2022, the report concludes that servicemembers typically take out larger loans with smaller down payments and end up with higher monthly payments over longer terms, even though they pay roughly the same vehicle prices as civilians. For new vehicles, servicemembers borrowed an average of USD 39,000, over USD 2,200 more than civilians, while putting down about USD 1,100 less; for used vehicles, they financed USD 27,500 on average, almost USD 400 more than civilians. Servicemembers faced average annual percentage rates 0.6 percentage points above civilian rates, contributing to average monthly payments of USD 644 for new vehicles, nearly USD 20 more than civilian borrowers and nearly USD 1,300 more over the life of the average new-vehicle loan. Add-on products further increased costs: over 70% of servicemembers purchased add-ons and paid about USD 140 more on average than civilians, with warranty, service, and maintenance plans most common and expensive; GAP products were the second most common, and servicemembers’ GAP purchases rose sharply in 2020 after the Department of Defense changed its interpretation of the Military Lending Act.