Yes, and service members have two distinct federal shields against predatory lending, each built for a different kind of debt. Confusing them is the most common mistake, because one law caps interest on new credit taken out while serving, and the other caps interest on debt that already existed before service. Knowing which applies is the key to using either one.
Shield one: the Military Lending Act (new credit during service)
The Military Lending Act (MLA), 10 U.S.C. § 987, targets the high-cost consumer credit historically marketed to the military, payday loans, vehicle title loans, and certain installment loans and credit cards. Its central protection is a hard cap:
- A creditor may not charge more than a 36% Military Annual Percentage Rate (MAPR) on covered consumer credit extended to a covered active-duty member or dependent.
- Crucially, the MAPR is comprehensive, it folds in not just interest but finance charges, credit insurance premiums, add-on products, and most fees, so lenders cannot hide the true cost in junk charges.
The MLA applies to new consumer credit extended while on active duty, which is exactly where predatory products do their damage.
Shield two: the SCRA 6% cap (pre-service debt)
The Servicemembers Civil Relief Act (SCRA) covers the other side: debt incurred before active duty. It limits the interest rate on those pre-service obligations and mortgages to 6% during military service. There is a catch built into it: the creditor must reduce the rate to 6% unless it can prove in court that the member’s ability to pay the higher rate is not materially affected by military service.
So the SCRA is not about new payday loans; it is about bringing down the interest on obligations the member already had when they entered service.
Matching the law to the debt
That contrast is the whole framework. The MLA caps the cost of new consumer credit at a 36% all-in MAPR; the SCRA caps the interest on pre-existing debt at 6%. A service member burdened by a recent payday or title loan looks to the MLA; one carrying older debt or a mortgage looks to the SCRA.
A military attorney defends against predatory lending by identifying when the debt arose, applying the correct law, and enforcing its cap, whether that means challenging a loan that exceeds the 36% MAPR or invoking the 6% pre-service cap.
When a member is trapped in a payday loan taken out while serving, the 36 percent all-in cap applies, while a mortgage taken before service falls under the separate 6 percent cap, and the attorney matches the law to the debt.
The bottom line is that two complementary protections cover the field. The Military Lending Act blocks predatory new credit with an all-in 36% MAPR ceiling, and the SCRA pulls down pre-service interest to 6%, so the defense begins with a simple question: was this debt taken on before service, or during it?
Frequently Asked Questions
What interest cap does the Military Lending Act set?
A 36% Military Annual Percentage Rate (MAPR) on covered consumer credit for active-duty members and dependents, and the MAPR includes interest plus most fees and add-on charges.
How is the SCRA different from the MLA?
The MLA caps the cost of new consumer credit extended during active duty, while the SCRA caps interest at 6% on debts and mortgages that were incurred before active duty.
Is the SCRA 6% cap automatic?
The creditor must reduce the rate to 6% during service unless it proves in court that the member’s ability to pay the higher rate is not materially affected by military service.
This article is general information about protections against predatory lending. It is not legal advice and does not create an attorney-client relationship. Eligibility and details vary and the law can change. Service members should consult their legal assistance office for help with a specific loan.
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