What types of loans are covered under the Military Lending Act?
Payday loans, overdraft lines of credit, and most installment loans are covered by the Military Lending Act.
As of October 3, 2016, most types of consumer loans offered to active-duty servicemembers and their dependents have to comply with the Military Lending Act (MLA). These credit products include, but are not limited to:
- Payday loans, deposit advance products, and vehicle title loans;
- Overdraft lines of credit but not traditional overdraft services; and
- Installment loans, with the exceptions noted below.
NOTE: Credit card companies didn’t have to comply with the MLA until October 3, 2017.
If you’re a servicemember on active duty and decide to take out one of these loans, you have rights under the MLA, including a limit on the interest rate the creditor can charge.
There are some loans the MLA doesn’t cover – namely, credit that is secured by the property being purchased. These loans include:
- Residential mortgages (financing to buy or build a home that is secured by the home), mortgage refinances, home equity loans or lines of credit, or reverse mortgages;
- A loan to buy a motor vehicle when the credit is secured by the motor vehicle you are buying; and
- A loan to buy personal property when the credit is secured by the property you’re buying, like a vehicle or home appliance.