Military Lending Act: the 36% cap on loans
If you are on active duty, or you are the spouse or dependent of someone who is, a lender cannot charge you more than 36% on most consumer loans.
What it is
The Military Lending Act (MLA) is a federal rule that protects active-duty servicemembers and their families from payday loans and other high-cost credit. A lender cannot charge you more than a 36% Military Annual Percentage Rate (MAPR). CFPB says the MAPR counts finance charges, credit insurance premiums, add-on credit products and fees such as application, participation and debt cancellation contract fees. A rate that looks lower can still break the cap once those are added in.
Military Annual Percentage Rate
Who is covered
- Active-duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard and Space Force.
- Reserve members on active duty, and National Guard members mobilized under federal orders for 30 or more consecutive days.
- Spouses and certain dependents of those members.
The regulation says coverage ends when the member leaves active duty. Once you are a veteran or retiree, the MLA no longer applies to new loans you take out. If you are separating, the date you leave active duty is the line.
What the law also stops
- No prepayment penalty. You can pay the loan off early without a fee.
- No forced arbitration. A lender cannot make you give up your right to go to court.
- No required military allotment. A lender cannot make you sign up for automatic pay deductions to repay the loan (32 CFR 232 allows only narrow exceptions).
What it covers and what it does not
CFPB lists credit cards, payday loans, vehicle title loans, overdraft lines of credit, and some installment and student loans as covered. Left out: residential mortgages, home equity loans, and loans taken to buy a vehicle or other personal property when that item is the collateral (purchase-money loans).
How to get your money back or report a lender
- Look at the loan paperwork for the rate. If it is a covered loan and the MAPR is above 36%, the lender is breaking the rule.
- Write down the lender, date, amount, and what you were charged.
- File a complaint with CFPB online or by phone (below). CFPB says it sends complaints to the company for a response.
- CFPB also lists the Department of Justice Office of Civil Rights as a place to report.
Trap to watch
Lenders check your status before they lend. 32 CFR 232 lets them use the Defense Manpower Data Center (DMDC) database or a consumer report. If you are covered, the protection is yours whether or not you mention it.
Where to call and where to go
Phone
- CFPB complaint line, Monday to Friday 9 a.m. to 6 p.m. ET: 1-855-411-2372 (TTY/TDD: 1-855-729-2372). Source: CFPB, MLA rights
Official pages