The CFPB's analysis revealed that military borrowers typically secure larger loans with smaller down payments and ultimately shoulder higher monthly costs compared to civilian counterparts. For new vehicles, servicemembers borrowed an average of $39,000 — over $2,200 more than civilians — while putting down about $1,100 less in down payments. For used vehicles, they financed $27,500 on average, nearly $400 more than civilians.
The report attributes these disparities to servicemembers' unique circumstances and potential vulnerability to predatory lending practices. According to the CFPB, military personnel "may be especially vulnerable to overreaching lending practices and have fewer resources to draw upon" because they are often required to have personal vehicles for military obligations and "may be young men and women far away from family supports."
Servicemembers faced average annual percentage rates 0.6 percentage points above civilian rates and accepted longer loan terms, resulting in monthly payments averaging $644 for new vehicles — nearly $20 more than civilian borrowers and nearly $1,300 more over the life of the average new vehicle loan. Over 70% of servicemembers also purchased add-on products, paying on average about $140 more for these products than civilians, with warranty and service plans being the most common and expensive category.
The findings highlight broader enforcement trends as the CFPB continues targeting financial institutions that exploit military families. The report follows recent CFPB actions against Navy Federal Credit Union for $95 million in illegal overdraft fees charged to servicemembers and enforcement actions against FirstCash and MoneyLion for Military Lending Act violations. The agency also noted that Reserve and National Guard members were forgoing an estimated $9 million annually by not receiving interest rate reduction benefits under the Servicemembers Civil Relief Act.
The report comes as the CFPB has intensified focus on military lending practices, with GAP product purchases among servicemembers increasing sharply in 2020 after the Department of Defense changed its interpretation of the Military Lending Act. Military borrowers were also more likely to make negative equity trade-ins, further compounding their financial exposure in the auto lending market.
The comprehensive analysis underscores potential systemic issues in how financial institutions serve military customers across the auto lending sector. The CFPB has proposed additional rules to protect servicemembers from data brokers selling sensitive personal information and continues encouraging consumers to submit complaints through its website or whistleblower reporting system.