Active-duty military: payday lenders cannot charge you more than 36% APR.

The Military Lending Act (MLA) provides special protections for active-duty service members, their spouses, and dependents. Payday lenders are prohibited from charging more than 36% MAPR (Military Annual Percentage Rate), effectively making most payday loans unavailable to covered borrowers.

MLA Protections

What the Military Lending Act provides

Protection

36% MAPR cap

All fees, charges, and premiums are included in the 36% cap. This effectively prohibits most payday loans to covered borrowers since typical rates far exceed 36%.

Protection

No mandatory arbitration

Lenders cannot require covered borrowers to waive their right to sue or submit to mandatory arbitration.

Protection

No mandatory allotment

Lenders cannot require military borrowers to set up an allotment (automatic paycheck deduction) as a condition of the loan.

Protection

No rollover penalties

Covered borrowers cannot be charged prepayment penalties and cannot be required to roll over or renew a loan.

Who Is Covered

MLA applies to active duty and dependents

Covered

Active-duty service members

All branches: Army, Navy, Air Force, Marines, Coast Guard, Space Force, and activated National Guard/Reserve members.

Covered

Spouses and dependents

The MLA also covers spouses, children, and other dependents of active-duty members.

Not Covered

Veterans and retirees

The MLA does not cover veterans, retirees, or inactive Reserve/Guard members. These individuals are subject to standard state lending laws.

If you are active duty and a lender charges more than 36% APR:

Report the violation to your installation’s legal assistance office, the CFPB, and the Department of Defense. The loan may be void.

If you choose...

If you understand your MLA protections:

  • You know any loan above 36% APR to active-duty military is illegal
  • You can refuse mandatory arbitration clauses and allotment repayment
  • You can report violations to your JAG office and the CFPB for enforcement
  • You can access Military OneSource and military aid societies for free alternatives

If you borrow without knowing your rights:

  • You may pay 300-700% APR when the law caps your rate at 36%
  • You may sign away your right to sue by agreeing to mandatory arbitration
  • Allotment repayment can disrupt your military pay and create financial hardship
  • Predatory lending can affect your security clearance and military career

Here's what you can do today

  1. Verify your MLA coverage status at your installation's legal assistance office.
  2. Check if the loan APR exceeds 36% — if it does, the lender is violating the MLA.
  3. Contact Military OneSource (800-342-9647) for free financial counseling and alternatives.
  4. If a lender violates the MLA, report to your JAG office and file at consumerfinance.gov/complaint.
  5. Use Balance On Hand to project your cash flow before borrowing.

Active-duty military have stronger protections. Know them before you borrow.

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