What types of loans are covered under the Military Lending Act?

Answer: 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 don’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. 
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