I am a member of the military or spouse/family member of a servicemember. Aren’t there limits on what I can get charged for a loan?

Answer: Yes, there are two laws that may limit the amount you are charged for a loan: the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA).

If you are a member of the military on active duty, the SCRA caps interest rates on loans taken out before entering active duty at 6% for the whole time you’re on active duty. The 6% interest rate cap applies to auto loans, mortgages, credit cards, other installment loans, as well as student loans.

In order to qualify for the 6% SCRA interest rate, you must:

  1. Currently be on active duty;
  2. Have taken out the loan before entering military service;
  3. Notify your lender in writing; and
  4. Include a copy of your military orders calling you to active duty.

The SCRA applies to active-duty members of the Army, Navy, Air Force, Marine Corps, and Coast Guard; members of the Reserves when on active duty; members of the National Guard mobilized under federal orders for more than 30 consecutive days; and active service commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration.

You can ask your lender for an SCRA interest-rate reduction at any time while you’re serving on active duty and up to 180 days after your release from active duty and it will be applied retroactively back to when you entered active duty. 

This SCRA right also applies to loans that were obtained by you and your spouse together – but NOT to loans taken out solely by your spouse/dependent. 

If your lender refuses to drop your interest rate to 6%, contact your local JAG office or financial readiness office for more information. To find your JAG Legal Assistance Office use the locator.

You also may be able to get assistance from your state attorney general.

The MLA also limits the cost of certain loans to servicemembers on active duty and their dependents. This law says a lender can’t charge an interest rate of more than 36% on most types of loans, including payday loans and deposit advance products, installment loans and overdraft lines of credit.  There are some exceptions to the MLA for loans secured by the property you’re buying such as a home or a car. Find out more about the types of loans the MLA covers.  

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