What are my rights under the Military Lending Act?
The Military Lending Act (MLA) says that you can’t be charged an interest rate higher than 36% on most types of consumer loans and provides other significant rights.
The MLA applies to active-duty servicemembers (including those on active Guard or active Reserve duty) and covered dependents.
Your rights under the MLA include:
- A 36% interest cap. You can’t be charged more than a 36% Military Annual Percentage Rate (MAPR), which includes the following costs in calculating your interest rate (with some exceptions):
- Finance charges,
- Credit insurance premiums or fees,
- Add-on products sold in connection with the credit, and
- Other fees like application or participation fees, with some exceptions.
- No mandatory waivers of consumer protection laws. A creditor can’t require you to submit to mandatory arbitration or give up certain rights you have under State or Federal laws like the Servicemembers Civil Relief Act.
- No mandatory allotments. A creditor can’t require you to create a voluntary military allotment in order to get the loan. An allotment is an automatic amount of money taken from your paycheck to pay back your loan.
- No prepayment penalty. A creditor can’t charge a penalty if you pay back part – or all – of the loan early.
Tip: If you have an issue with a consumer loan, you can visit the JAG Legal Assistance Office locator to find help. You can also ask your installation financial readiness office for information.