Military Lending Act

There is a proposed change to the Military Lending Act that would expand protection if it is passed. Read about it here.

The Military Lending Act was part of the National Defense Authorization Act for Fiscal Year 2007 (NDAA FY07). Payday loans, vehicle title loans, and tax refund anticipation loans are covered by the legislation. Under the new rules, covered products may not have a military annual percentage rate (MAPR) of more than 36%. In addition, these loans may not be automatically refinanced by the lender.

Under the law a payday loan is defined as loans that:

  • are closed end credit;
  • have a term of 91 days or less;
  • do not exceed $2,000; and
  • the borrower provides a check or other payment instrument or debit authorization that is deferred for one or more days.

Vehicle title loans are defined as loans that:

  • are closed end credit;
  • have a term of 181 days or less; and
  • are secured by a motor vehicle licensed to operate on roadways.

In addition, lenders must now include a disclosure statement in loan applications to identify covered borrowers.

This rule is an important first step in protecting service members and their families from unscrupulous and predatory lending practices. The Department of Defense will continue to monitor the status of predatory lending targeted at service members and has the ability to amend the rules implementing the Military Lending Act as required. 

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