Getting a loan can be scary. Stories about fraud and predatory practices from loan companies abound. Luckily, the Marine Lending Act (MLA) helps protect you. But what is the MLA? How does it work? And if you’re already familiar with the MLA, do you know what changes have occurred to the law within the past year?
First, here’s a quick rundown of the MLA:
While you may be familiar with the term annual percentage rate, or APR, the MLA requires that products provided to covered borrowers must comply with an additional measure of cost, the military annual percentage rate, or MAPR. MAPR is the cost of the consumer credit transaction expressed as an annual rate, much like the annual percentage rate currently required to be disclosed by a creditor. It differs from the currently disclosed annual percentage rate in that it also includes other fees and charges that currently are not required to be disclosed to the consumer as part of the Truth in Lending Act definition of annual percentage rate. The military annual percentage rate includes administrative and membership fees, insurances, and other fees known at the time the loan is signed and obligated.
The only fees not added into the military annual percentage rate calculation are late payment fees and default fees (which would not accrue if the loan were paid on time), and fees that are obtained by the creditor as a pass-through to the state and not under the control of the creditor to adjust.
Under the MLA, the MAPR cannot exceed 36 percent for borrowers covered by the MLA.
What Credit Products are Covered?
- Installment loans
- Pawn loans
- Payday loans
- Vehicle title
- Tax refund loans
- Credit cards (beginning 3 October 2017)
What Credit Products are NOT Covered?
- Home equity lines of credit
- Loans to purchase or refinance a home
- Auto finance loans secured by the vehicle
- Loans secured by the personal property purchased with the loan
How do I Know if I am protected by the MLA?
You are covered if you are on active duty along with your family members enrolled in DEERS. This includes members of the Guard and Reserve activated for 30 days or longer.
Still searching for more in-depth assistance with [topic]? Contact your installation’s Personal Financial Management staff or your local Staff Judge Advocate (JAG) Office. In addition, find information on MLA from the Consumer Financial Protection Bureau (CFPB) and Military OneSource.
Although the initial MLA went into effect in 2006, there have been dramatic expansions in what the MLA covers. See this information below.
- Covers most forms of consumer credit.
- Prohibits lenders from requiring you to waive your legal rights.
- Requires lenders to provide certain disclosures.
To learn more about the MLA and other financial issues, contact your local Personal Financial Management Program.