What the Military Lending Act protects you from

The Military Lending Act (MLA), 10 U.S.C. § 987, limits the terms of consumer credit offered to covered servicemembers and their dependents. The main limit is a cap of 36 percent on the annual percentage rate, counting fees and other charges as well as interest.^[1] It also bans several loan terms, such as prepayment penalties, forced arbitration and required military allotments.^[1]^[2] It is separate from the Servicemembers Civil Relief Act (SCRA). Some common loans, such as mortgages and a loan used to buy a car that is secured by the car, are outside it.^[1]^[2]

Who is covered

The statute covers a "covered member" and their dependents. A covered member is a member of the armed forces who is on active duty under a call or order that does not specify a period of 30 days or less, or on active Guard and Reserve duty. A dependent is a person described in certain parts of 10 U.S.C. § 1072(2).^[1] The CFPB lists the covered group as:^[2]

active-duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard and Space Force;
members of the Reserves serving on active duty;
members of the National Guard mobilized under federal orders for more than 30 consecutive days;
spouses of those servicemembers; and
sometimes, dependents of those servicemembers.

The protections

Protection	What the statute and the CFPB say
36 percent cap	A creditor may not impose an annual percentage rate greater than 36 percent on consumer credit extended to a covered member or dependent.^[1] The CFPB calls this the Military Annual Percentage Rate (MAPR).^[2]
What counts toward the rate	The statute defines "interest" to include all cost elements of the credit: fees, service charges, renewal charges, credit insurance premiums, any ancillary product sold with the credit, and any other charge or premium.^[1] The CFPB lists finance charges, credit insurance premiums, add-on credit-related products, and fees such as application fees, participation fees and debt cancellation contract fees.^[2]
Disclosures	Before the credit is issued, the creditor must give the borrower, orally and in writing: a statement of the annual percentage rate, the disclosures required by the Truth in Lending Act, and a clear description of the payment obligations.^[1]
No rollover or refinance with same-creditor credit	It is unlawful to extend credit where the creditor rolls over, renews, repays, refinances or consolidates credit it earlier extended to the borrower with the proceeds of other credit extended to the same covered member or dependent.^[1]
No waiver of legal rights	The borrower may not be required to waive legal recourse under otherwise applicable state or federal law, including the SCRA.^[1]
Arbitration and notice	The creditor may not require arbitration or impose onerous legal notice provisions, or demand unreasonable notice as a condition of legal action.^[1] The statute also says an agreement to arbitrate a dispute over this credit is not enforceable against a covered member or dependent.^[1] The CFPB puts it this way: a lender cannot make you agree to arbitration.^[2]
No access to your accounts or title as security	The creditor may not use a check or other method of access to a deposit, savings or other financial account, or the title of a vehicle, as security for the obligation.^[1]
No required allotment	The creditor may not require, as a condition of the credit, that you set up an allotment to repay it.^[1]^[2]
No prepayment penalty	The borrower may not be prohibited from prepaying the loan or charged a penalty or fee for prepaying all or part of it.^[1]^[2]

Which loans are covered and which are not

The statute defines "consumer credit" by regulation, but it says the term does not include a residential mortgage, or a loan procured in the course of buying a car or other personal property when the loan is offered for the express purpose of financing that purchase and is secured by it.^[1] The CFPB gives the practical list:^[2]

Generally subject to the MLA (CFPB)	Not subject to the MLA (CFPB)
Credit cards. Payday loans, deposit advances, tax refund anticipation loans and vehicle title loans. Overdraft lines of credit, but not traditional overdraft charges. Installment loans, except auto loans. Some student loans.	Residential mortgages, including loans to buy or build a home secured by the home. Other home loans, including mortgage refinances, home equity loans, home equity lines of credit and reverse mortgages. Auto loans where the lender can repossess the vehicle you are buying. Personal property loans where the lender can repossess the property you are buying, like a home appliance.

The CFPB points to a flow chart on its site to check a specific loan type.^[2] See our guides to payday loans and car title loans.

How the MLA differs from the SCRA

The SCRA is a separate federal law. The CFPB says home loans, vehicle loans and other loans taken out before you enter active duty are protected by the SCRA.^[2] The MLA statute says nothing in it may be read to limit or affect the SCRA's section 207 (50 U.S.C. § 3937).^[1] See the SCRA, explained.

Penalties and remedies

A creditor who knowingly violates the section can be fined, imprisoned for up to one year, or both.^[1]
A credit agreement or contract prohibited by the section is void from the start.^[1]
A person who violates the section is civilly liable for actual damages of not less than $500 per violation, appropriate punitive damages, equitable or declaratory relief, and any other relief provided by law, plus costs and reasonable attorney fees in a successful action.^[1]
A civil action must be brought no later than the earlier of two years after the plaintiff discovered the violation, or five years after it occurred.^[1]
There is a defense for a violation that was not intentional and resulted from a bona fide error despite procedures reasonably adapted to avoid it. The statute says an error of legal judgment about obligations under the section is not a bona fide error.^[1]

Who to ask

The CFPB suggests a military legal office for questions about your situation; it lists legalassistance.law.af.mil to find the closest one. If a financial company gives you trouble about your MLA rights, the CFPB says you can submit a complaint online or at (855) 411-CFPB (2372).^[2] For tips on where else to complain, see where to file a credit, debt or scam complaint.

How to verify this yourself

Read 10 U.S.C. § 987.^[1] The statute leaves detailed definitions, including of "creditor" and "consumer credit," to Department of Defense regulations.
Read the CFPB's Military Lending Act page and its applicability flow chart.^[2]
Read your loan agreement and any disclosures. Look for the rate stated as a MAPR, an arbitration clause, a prepayment fee and an allotment requirement.

What this page does not cover

It does not apply the Department of Defense regulation, which sets how the rate is calculated and the detailed definitions. It does not say whether your own loan is covered, or whether a lender broke the law. Those depend on your status on the date of the loan and on the loan's terms. It does not cover the SCRA beyond the point above. It is general information, not legal advice. Our Standard checks credit repair and debt settlement companies; the Register shows how.

Your next step

Before you sign any loan, ask the lender to confirm in writing whether the MLA applies and what the MAPR is. If you already have a loan you think breaks these limits, keep the paperwork and talk to a military legal office. The debt collection hub and the hub for medical, auto and other consumer debt link to related guides.

When we will update this page

We revisit it if 10 U.S.C. § 987 is amended or the CFPB changes its page. Sources last read 2 October 2026.

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