Short answer: if you are on active duty, or the dependent of someone who is, most consumer loans made to you must have a Military Annual Percentage Rate (MAPR) of 36% or less (CFPB, 32 CFR 232.4). The MAPR counts more costs than the regular APR, and the law also bans some loan terms outright (32 CFR 232.8).
Who and what is covered
| Covered | Not covered | |
|---|---|---|
| People | Active duty servicemembers and their dependents, for loans taken out during active duty | Veterans and others who are not on active duty, and not dependents |
| Loans | Payday loans, deposit advance products, vehicle title loans, overdraft lines of credit, most installment loans | Credit secured by the property being bought: mortgages and home equity products, auto loans secured by the car, and purchase loans secured by the item |
Source: CFPB. Traditional overdraft services are not covered, while overdraft lines of credit are.
What the MAPR includes
The MAPR includes the finance charge plus costs the regular APR can leave out, such as credit insurance premiums, debt cancellation or suspension fees, fees for credit related add on products and most application and participation fees, even when Regulation Z would not count them (32 CFR 232.4). So a loan with a 30% APR can still break the 36% MAPR cap once add ons are counted.
Terms the law bans
For covered loans, a lender may not (32 CFR 232.8):
- Roll over, renew or refinance your loan with new credit from the same lender (with limited exceptions).
- Require you to waive your legal rights under state or federal law.
- Require arbitration, or other onerous legal notice terms.
- Require a military allotment as a condition of the loan.
- Charge a penalty for paying all or part of the loan early.
- Use a check or access to your bank account as security, with limited exceptions for electronic payments.
- Take your vehicle title as security, unless the lender is a bank, credit union or savings association.
What to do
- Tell the lender you are covered, and ask for the MAPR in writing.
- If a lender breaks these rules, contact the legal assistance (JAG) office on your installation, your state attorney general, or submit a complaint to the CFPB (consumerfinance.gov/complaint).
- Federal credit unions also offer small payday alternative loans capped at 28% APR (NCUA).
- For how APR works in general, see APR vs interest rate.
Start your loan request How our service works
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.