The Military Lending Act

The Military Lending Act was enacted by Congress in 2006 and expanded in 2015. Its purpose is to protect members of the military community from predatory lending practices.

What is the Military Lending Act?

The Military Lending Act limits the amount of money that a lender can charge in interest, fees, credit insurance premiums, debt cancellation fees, and other credit-related products that may increase the overall cost of a product. This limit is called the Military Annual Percentage Rate (MAPR), and it is capped at 36%.

The Military Lending Act and associated MAPR are effective when servicemembers and certain eligible dependents apply for various loans and credit products including credit cards, payday loans, some installment and student loans, overdraft lines of credit, tax refund anticipation loans, and vehicle title loans. The Act does not apply when members of the military community apply for residential mortgages or refinances, home equity loans, vehicle loans, or personal property loans. In short, if a loan is secured by physical property you own or are buying, the Military Lending Act does not apply.

Does the Military Lending Act provide other protections?

When a covered individual applies for credit or a loan, lenders must disclose the MAPR for that product both in writing and orally. Further, lenders cannot force servicemembers or eligible dependents to agree to arbitration, nor can lenders require covered individuals to waive their rights to take legal action – the Servicemembers Civil Relief Act provides additional protections.

Lenders cannot charge prepayment penalties should the loan be repaid prior to its due date.

Finally, lenders cannot require covered individuals to set up military allotments as a loan repayment method. An allotment allows money to be automatically drafted from each paycheck to repay the loan; this cannot be a requirement for individuals to qualify for the loan or product in question.

Who is eligible for protection under the Military Lending Act?

The Military Lending Act covers active duty servicemembers, their spouses, and certain dependents (children under 21 years old, or 23 if enrolled full-time in school). Reserve and National Guard members qualify, provided they have been on active duty for at least 30 consecutive days.

The Military Lending Act website helps members of the military community verify their eligibility for Military Lending Act protections. It can be used by servicemembers, eligible dependents, and creditors who are conducting verification. Website users are required to create a log in, after which they can request records and print certificates through the website. These certificates are also called “Status Reports Pursuant to Military Lending Act.”

What happens if the Military Lending Act is violated?

If you want to learn more about the Military Lending Act, you can contact your local Legal Assistance Office for more information at no cost. (Find the nearest office here.) If you think that you have been subject to a violation of the Act, you can submit a complaint to the Consumer Financial Protection Bureau.