What the MLA Does
The Military Lending Act (MLA) caps interest at 36% MAPR (Military Annual Percentage Rate) for active-duty service members and their dependents. This effectively bans traditional payday loans for military families because payday loan APRs typically exceed 300%. The MLA also prohibits mandatory arbitration, mandatory allotment repayment, and prepayment penalties for covered borrowers.
Who Is Covered
Active-duty members of the Army, Navy, Air Force, Marine Corps, Coast Guard, and their dependents (spouse, child under 21, or other dependent). National Guard and Reserve members on active duty orders of more than 30 days are covered. Coverage begins on the date of active-duty orders and continues throughout active service.
Covered Products
The MLA covers: payday loans, vehicle title loans, tax refund anticipation loans, deposit advance products, installment loans, and credit cards with terms up to certain thresholds. It does not cover mortgages, home equity loans, vehicle purchase loans, or credit cards with no preset spending limit. If you are unsure whether a product is covered, the lender is required to check your MLA coverage status.
Enforcement
Loans that violate the MLA are void -- you owe nothing. The lender cannot collect any principal, interest, or fees. Contact your installation's legal assistance office, the CFPB Military Office, or a military legal aid society. You can also file complaints with the CFPB and your state attorney general. The Department of Defense actively enforces the MLA.
Frequently Asked Questions
Can a payday lender claim they did not know I was military?
Lenders are required to check the MLA database before making a covered loan. If they failed to check, that is their problem, not yours. The protections still apply.
Am I covered if I am in the Reserves but not on active duty?
Only if you are on active-duty orders of more than 30 days. Traditional Reserve or National Guard members not on active orders are not covered by the MLA.
What if I already signed a payday loan that violates the MLA?
The loan is void from the beginning. You can stop payments and the lender cannot collect. Contact your base legal assistance office for help enforcing this.
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