The Military Lending Act (MLA), 10 U.S.C. § 987, enacts robust federal consumer financial safeguards for active-duty military personnel, National Guard on active duty, and their dependents.
1. Core Safeguards of the Military Lending Act
- 36% Military Annual Percentage Rate (MAPR) Cap: Unlike traditional TILA APR calculations, MAPR includes all credit insurance premiums, debt cancellation fees, application surcharges, and ancillary product costs.
- Mandatory Covered Borrower Database Verification: Lenders must verify active-duty status directly through the Defense Manpower Data Center (DMDC) or nationwide consumer reporting agencies.
- Prohibition of Mandatory Allotments: Lenders are barred from requiring military allotments as a prerequisite for loan approval.
- Prohibition of Vehicle Title Pledges: Lenders cannot hold personal motor vehicle titles as security for short-term advances.
- Ban on Mandatory Arbitration Clauses: Covered borrowers retain full rights to pursue civil litigation and class actions in federal courts.