Enacted by Congress, the Military Lending Act (MLA, 10 U.S.C. § 987) provides comprehensive credit protections for active duty service members and their dependents.
1. Core MLA Statutory Mandates
- 36% MAPR Cap: Lenders cannot charge an effective Military Annual Percentage Rate exceeding 36%, which includes all interest, application fees, credit insurance premiums, and add-on charges.
- Mandatory Arbitration Prohibition: Lenders cannot require service members to waive their right to a court trial or submit to binding private arbitration.
- Prohibition on Mandatory Allotments: Lenders cannot condition credit approval on establishing an automated military pay allotment.
- Zero Prepayment Penalties: Service members retain the unconditional right to pay off loans early with zero financial penalties.