Are Payday Loans for the Military Personnel Legal ?

The regular consumers are a bit unfortunate because they need to rely on high interest short term loans to meet unexpected financial needs. However, same is not true in the case of military personnel. The clearest answer to the above question is Yes.  Payday loans are considered as legit for military men in the U.S. if and only if the lending institution abides to MLA(Military Lending Act). It is intended to prevent lenders from excavating military citizens with high interest rates and fees that is involved in the process of payday loans, tax refund loans and car title loans. All the active-duty military members and their spouses are protected under this act.

Regulations Under Military Lending Act

• 36% Interest Rate Caps: The loans that fall under 3 months term are subject to this interest rate cap. As 400% APR is unbearable rate, so 36% is still reasonable comparatively.
• No Automatic Repayments: Both the lender and the active duty borrower are not allowed to agree for military allotment or automatic repayment from the paycheck as done in the case of short term loans to approve the loan application.
• No Penalty for Early Repayment: Being a military personnel if one finds himself to be capable of paying back the loan before the end of the term, he could not be charged any penalty fee.
• Renunciation of Consumer Protection Laws is Prohibited: A lender cannot ask the on-duty military man to give up any rights under state or federal laws, as they can ask general borrowers.

Loan Which Are Not Covered Under Military Lending Act

There are some short-term loans that fall outside the payday loans. These loans are typically know as installment loans and come with longer and flexible repayment terms and lower interest rates. The MLA does not cover any kind of credit loan that is secured by the property. For example:

• Residential Mortgages, Home Equity Loans, Mortgage refinances
• An Automobile loan secured by the automobile bought by the borrower
• Property Loans secured by the property to be borrowed

Unfortunately, MLA does not cover most of the secured loans. That means the military borrower can still be preyed on by predatory lenders offering mortgage loans, auto loans of any other secured loan. If anyone is encountered with a lender violating rules of Military Lending Act, he can submit a complaint to Consumer Financial Protection Bureau.

Loans Which Are Available To Active-Duty Military Men and Their Families

Being a military member or a military dependent, you are eligible to apply for any  unsecured personal loan that come with fixed rates and flexible repayment terms. Nowadays, many lenders offer loans for military members, retired military members and their families that specifically comply with the MLA laws. Despite the reason for which the loan is required (a medical emergency or some other large expense), these loans can offer cash between $500 to $40,000. An interest rate is fixed to 36% under MLA.

A short-term loan is an excellent aid to meet a financial emergency. You are lucky if you are an active-duty military member or a dependent because you have added protection  against high interest rates by military Lending Act.