Military Lending Act Amendment Proposed

The Department of Defense is proposing to expand the reach of the Military Lending Act’s interest rate cap. The Act caps the interest rate on some kinds of loans to servicemembers at 36%. At present the Act’s cap applies to relatively few loans. The CFPB’s statement supporting the proposal explains:

High-interest loans to the military have been a problem for many years. This problem reached a crisis as payday and other lenders began thronging outside the gates of military installations in ever-increasing numbers. In 2006, Congress acted against this threat to military financial and operational readiness by passing the Military Lending Act. This law was designed to protect active-duty servicemembers and their families from high-cost loans by capping rates at 36 percent.

The proposed rules are here.