The Military Lending Act (MLA): Federal 36% MAPR Caps & Servicemember Protections

Enacted to protect active-duty military personnel and their dependents from predatory credit terms, the Military Lending Act (MLA) establishes rigorous federal lending safeguards.

Key Safeguards of the Military Lending Act

• 36% Military Annual Percentage Rate (MAPR) Cap: All-inclusive interest and fee cap covering credit insurance, application fees, and participation charges.
• Prohibition on Mandatory Allotments: Lenders cannot require servicemembers to establish military pay allotments as a condition of credit.
• No Prepayment Penalties: Borrowers retain the unconditional right to pay off loans early with zero punitive fees.
• Ban on Mandatory Arbitration: Servicemembers cannot be forced into binding private arbitration or waive their legal rights under the Servicemembers Civil Relief Act (SCRA).

Covered Borrowers Verification

Creditors must verify active-duty status using the Defense Manpower Data Center (DMDC) database before executing consumer credit agreements.