You have rights under the Military Lending Act
The Military Lending Act (MLA) is a federal law that protects members of the military community when borrowing money.
Review key protections under the MLA
The MLA is a federal law. It protects you along with state or other laws. Below, you can find information on the MLA protections that many servicemembers ask about.
People covered under the MLA are:
- Active-duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard, and Space Force
- Members of the Reserves serving on active duty
- Members of the National Guard mobilized under federal orders for more than 30 consecutive days
- Spouses of the servicemembers listed above
- Sometimes, dependents of the servicemembers listed above
For more details, check Military OneSource and the Office of Financial Readiness .
A military legal office can help you with your specific situation and answer more questions that fall under the MLA. You can look up your closest military legal office at legalassistance.law.af.mil .
If a financial company is giving you trouble about your rights under the MLA, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372). You can also report violations of the MLA to the Department of Justice’s Office of Civil Rights .
Limits on loan costs
No more than 36% annual interest
You can’t be charged more than a 36% Military Annual Percentage Rate (MAPR). To calculate the rate, you need the following information:
- Finance charges
- Credit insurance premiums
- Add-on credit-related products sold in connection with the credit
- Fees like application fees, participation fees, or fees for debt cancellation contracts
No prepayment penalty
A prepayment penalty is a fee that some lenders charge if you pay off all or part of your loan early. Under the MLA, lenders cannot charge you prepayment penalties.
Limits on other loan requirements
No mandatory waivers of legal rights
Arbitration is a way to solve disputes between you and a company outside of court. Someone other than a judge hears each side and decides on the solution. Agreeing to arbitration usually also means giving up your right to join a class-action lawsuit. Under the MLA, a lender cannot make you agree to settle a dispute with arbitration.
No mandatory allotments
An allotment is a payment you set up to regularly come out of your military pay. A lender cannot make you use a military allotment to pay your loan.
You are not guaranteed to get the loan
Lenders can refuse to lend to you, if they know that they charge more than the 36% annual interest cap, or if they know their loan agreements have other terms that are prohibited under the MLA.
Loans that are subject to the MLA
In general, the MLA limits interest charged on everyday credit and loan products you might use, including:
- Credit cards
- Payday loans, deposit advances, tax refund anticipation loans, and vehicle title loans
- Overdraft lines of credit, but not traditional overdraft charges
- Installment loans (except for auto loans)
- Some student loans
However, some commonly used loans are not subject to the MLA’s rules, including:
- Residential mortgages, including loans to buy or build a home that is secured by the home
- Other home loans including mortgage refinances, home equity loans, home equity lines of credit, and reverse mortgages
- Auto loans when the lender can repossess the vehicle you are buying
- Personal property loans when the lender can repossess the property you are buying, like a home appliance
Home loans, vehicle loans, and other types of loans taken out before you enter active duty are protected by the Servicemembers Civil Relief Act.