(Further) Protection for Our Protectors: The Military Lending Act


We all need a little help sometime.  For many this help comes in the form of a loan.  Clearly if one needs money and another has money to loan the lender should be entitled to obtain some measure of return on the money borrowed.  This return is commonly known as interest and state and federal law require clear disclosures as to the rate of interest and other fees the lender shall impose on the borrower.  And there are limits on the interest and fees that can be charged. 

For members of the military there are further protections regarding terms of loans and other borrowing.  The Military Lending ActMilitary Lending Act covers an active duty Servicemember with active duty orders for a period not less than 30 days, or a Reservist or National Guardsman who is on active duty orders for a period of 180 days or more. Dependents of these Servicemembers are also covered. 

The Act covers payday loans (if required to be repaid within 90 days), vehicle title loans (if required to be repaid within 180 days), and tax refund anticipation loans.  Some key provisions of the Act include:

  • 36% interest cap: Creditors are prohibited from charging any member greater than a 36% Military Annual Percentage Rate (MAPR) which includes interest, fees, credit service charges, and credit renewal charges; credit insurance premiums; and fees for credit-related products sold in connection with the transaction. The MAPR must be stated orally and in writing.
  • No automatic roll-over on loans
  • No waiver of consumer protection laws including provisions of the Servicemembers Civil Relief Act.
  • No mandatory arbitration provisions
  • Creditor cannot secure a loan with a debit authorization, car title, allotment of military wages or personal check mandatory allotment
  • No penalty for prepayment of a loan, in whole or in part.

Since taking effect in 2007 the Act has helped minimize predatory lending as relates to members of the military but some abuses still occur.  This is due in part to the fact that many popular loan products—vehicle loans and leases, credit cards, rent-to-own contracts—are not covered by the Act.  Some businesses prey on servicemembers and their families in an effort to maximize profits.

The Military Lending Act now includes a plethora of remedies—actual, statutory and punitive damages; equitable relief; and attorneys’ fees.  If you believe your rights have been violated contact Attorney John O’Neal for a free consultation about your situation.  And thank you immensely to all veterans and their families for the ongoing sacrifice for our country.

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