If you've ever applied for a credit card or loan while serving, you've probably benefited from the Military Lending Act (MLA). This federal law protects active duty service members, certain Guard and Reserve members, and their families from predatory lending practices, most notably by capping interest rates on certain types of consumer credit. The Military Lending Act and the Servicemembers Civil Relief Act (SCRA) are not the same law. They protect different things at different times. The MLA covers new loans and credit cards you take out while you're serving. The SCRA covers debts and financial obligations you already had before you entered active duty. This guide explains what the Military Lending Act covers, who qualifies for its protections, how the 36% rate cap actually works, and what to do if you think a lender isn't following the rules.
What Is the Military Lending Act?
The Military Lending Act is a federal law, codified at 10 U.S.C. § 987, that limits the cost of certain types of consumer credit for active duty service members and their dependents. The MLA does two main things:
It caps the total cost of covered credit at a 36% Military Annual Percentage Rate (MAPR).
It bans certain loan terms and practices that regulators consider unfair or predatory when used against military borrowers.
