Military Lending Act Compliance Toolkit

Overview

The Military Lending Act (MLA) provides safeguards to members on active duty and their dependents in the area of pay day loans, vehicle title loans, refund anticipation loans, military installment loans, rent-to own, and other forms of consumer credit.  In July 2015, The Department of Defense (DoD) amended its regulation that implements the MLA. The final rule amended “consumer credit” to extend the definition to a much broader range of closed-end and open-end credit products.Under the new rule, DoD expanded the scope of the MLA regulation by aligning its scope with that of the Truth in Lending Act (TILA) and Regulation Z. As a result a wide range of credit transactions that are subject to Regulation Z, including open-end credit and installment loans-are now also subject to the MLA regulation for the first time. However, the final rule does not apply to residential mortgage loans, secured motor vehicle and personal property loans, and transactions not covered by Regulation Z. Compliance with this rule became mandatory on October 3, 2016 while creditors offering credit card loans to servicemembers will have until October 3, 2017 to comply. 

The rule requires creditors, including credit unions, which offer the loan products addressed in the rule, to disclose to borrowers who are covered under the rule the cost of the transaction as a total dollar amount and an annualized percentage rate (the Military Annual Percentage Rate or MAPR). This information must be disclosed before the borrower becomes obligated on the transaction. The disclosures under this rule are different from and in addition to the disclosures required under the federal Truth-in-Lending Act.

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