AFR Statement: AFR Welcomes Final Rules to Close Gaps in Military Lending Act

Today, in a win for servicemembers—who are too often the targets of harmful lending practices—the Department of Defense announced finalized rules to close gaps in the Military Lending Act (MLA) regulations that have allowed for exorbitantly high-interest rate loans to persist for men and women in uniform.

The MLA was passed in 2006 to cap interest rates on payday and other loans made to military families at 36%. In the aftermath, however, lenders exploited loopholes in the rules and re-designed their loans to evade the caps.

The updated regulations finalized today will make sure that the predatory lenders cannot evade the interest rate cap. The rules will also include charges for most add-on products in calculating the interest rate, so that the new rules can’t be evaded through the addition of extra fees.

Americans for Financial Reform welcomes these strengthened Military Lending Act rules, which will protect people in uniform from loan shark abuses, and we look forward to further action by the CFPB and others to protect veterans and the rest of the population from debt trap abuses.