What is the Military Lending Act (MLA)?
The Military Lending Act (MLA), codified in 10 U.S.C. § 987, is a federal law designed to protect active-duty service members of the Army, Navy, Marine Corps, Air Force, and Coast Guard, including those on active Guard or Reserve duty, and their dependents (collectively referred to as "Covered Borrowers") from certain predatory lending practices.
Who is a "Covered Borrower" under the MLA?
A Covered Borrower includes:
- An active-duty member of the Armed Forces (Army, Navy, Marine Corps, Air Force, Coast Guard), including those on active Guard or Reserve duty.
- A dependent of an active-duty service member, as defined by the Department of Defense.
What is the Military Annual Percentage Rate (MAPR)?
The MAPR (Military Annual Percentage Rate) is a rate that must not exceed 36% for consumer credit extended to Covered Borrowers. It is similar to the standard Annual Percentage Rate (APR) but includes a wider range of costs to ensure the 36% cap is effective.
What costs are included in the 36% MAPR limit?
The MAPR limit of 36% includes:
- Applicable interest
- Most fees
- Credit-insurance premiums
- Charges for ancillary products
The goal is to ensure that the total cost of credit to a Covered Borrower, including these fees and charges, does not exceed the 36% threshold.
Does the MLA replace other consumer protection laws?
No. The disclosure explicitly states that "Other governmental programs and laws may also govern or apply to this transaction but are not described in the following disclosure." The MLA provides additional protections for Covered Borrowers and works in conjunction with other state and federal consumer protection laws.
How can a Covered Borrower confirm if these protections apply to them and receive verbal disclosures?
Covered Borrowers can obtain a verbal disclosure of the MAPR and other important payment information, and determine whether these protections apply to them, by calling the following number: 1-855-425-4618
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