Short answer: a loan you took out before entering military service, alone or jointly with your spouse, cannot bear more than 6% interest a year during your military service, and for a mortgage, one year after (50 U.S.C. 3937(a)(1)). Interest above 6% is forgiven, not delayed (3937(a)(2)). To get it, send the lender written notice and a copy of your orders, no later than 180 days after you leave service (3937(b)(1)). For loans you take out while on active duty, the separate 36% cap of the Military Lending Act applies (CFPB).
What the cap covers
| Question | Answer |
|---|---|
| Which debts | Debts with interest over 6% that you incurred before entering military service, alone or jointly with your spouse (3937(a)(1)). The CFPB lists auto loans, mortgages, credit cards, other installment loans and some student loans (CFPB) |
| What counts as interest | Service charges, renewal charges, fees and other charges, except bona fide insurance (3937(d)(1)) |
| How long | During military service; for a mortgage, also one year after (3937(a)(1)) |
| From when | From the date you are called to military service, once the lender gets your notice and orders (3937(b)(2)) |
| Your payment | Each payment is reduced by the forgiven interest for that period, so the principal is not sped up (3937(a)(3)) |
How to ask
- Write to the lender and ask for the SCRA interest rate reduction. Include a copy of the orders calling you to service and any orders extending it, or another appropriate proof such as a certified letter from a commanding officer (3937(b)(1)(A)).
- You can ask any time while on active duty and up to 180 days after release. The orders show the date from which the reduction is figured (CFPB).
- A lender may also check your status itself through the Defense Manpower Data Center (3937(b)(1)(B)); sending the notice yourself is still the safe step.
- Asking cannot be held against you: a lender can't revoke or change your credit agreement or report negative information for using your SCRA rights. Late or missed payments can still be reported (CFPB).
- A court can let a lender charge more if your military service did not materially affect your ability to pay (3937(c)).
Deadline example (our count): if you are released from service on March 31, 2027, 180 days later is September 27, 2027.
What the reduction is worth
Example, not a quote: a $8,000.00 personal loan at 18% for 36 months, $289.22 a month, taken out before service. In the first month of service, interest at 18% would be $120.00; at 6% it is $40.00, so $80.00 is forgiven and the payment drops to $209.22, while the $169.22 that goes to principal stays the same. Over 12 months of service on that schedule, about $842.55 of interest is forgiven (our calculation, rounded each month).
If you have questions, the CFPB points servicemembers to their local JAG legal assistance office (CFPB). If a lender will not apply the cap, you can file a complaint.
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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.