Nobody is joining the military just for materialistic reasons, of course. It is an honor to serve your country. But nonetheless, there are quite a few perks that you can – and should – enjoy, for example, education assistance and also protection from unfair and predatory lending. The regulations put caps on the APRs that lenders can offer those in the military, which takes a lot of stress off of a borrowing process. And if your stress is tied to the bad credit history – don’t worry, just visit Bad Credit Loans in Connecticut to find a solution to your problems.
Is a payday loan for the military legal?
It is not, as all lenders are subject to the MLA – an act that prevents providers from putting military personnel in a difficult financial position with huge interest rates and fees that always come with payday loans and car loans.
Military members on active duty and their spouses are protected by the law, that requires:
- Interest rates capped. If the loan term is under three months, a 36% cap is put on them. While still being high, it is far easier to afford than APRs that come in hundreds of percent with other loans.
- No waivers. You can’t be persuaded into giving up your rights to consumer protection laws or submitting a mandatory arbitration, like the general public.
- No allotments. You don’t have to sign up for a voluntary military allotment, or automatic repayment from your paycheck for your application to be approved.
- No fees or penalties. You can’t be charged a fee or a penalty if you are able to pay off your loan before the end of your terms.
There are, though, some loans that are not covered under the Military Lending Act. Those are called installment loans. They would usually mean lower interest rates and longer terms but are still not very cheap.
Also, the protective act doesn’t cover credit that is secured by the purchased property. For example mortgages (residential, reverse and refinances), home equity loans, new car loans (if the vehicle serves as collateral), a loan to buy property (if the said property serves as collateral) are not included in the MLA.
Do I need to worry while taking out a personal loan?
Even though the MLA prevents specific predatory lending to military personnel, it doesn’t usually cover secured loans, which can lead you to fall victim to unscrupulous lending with residential mortgages, used car loans or while taking out a loan through retail store for home appliances.
Some lenders work around and find loopholes in the law or bend the rules to design loans that are almost the same as those considered illegal by the MLA.
Do you feel like your consumer loan violets the act? Don’t hesitate and submit a complaint with the Consumer Financial Protection Bureau fast.
Loans for military members and their families
If you’re on active duty, you and your dependents can apply for various unsecured personal loans that come with fixed rates and good terms.
There’s always an offer, where the demand is, so now you can find lots of loan choices for military members and their families, as well as for the retired military. These loans comply with the act and are totally legal. They can be used for a variety of expenses, ranging from medical to financial emergency, with the amount available from a $600 loan to a $40,000 loan. Of course, under the MLA the rates can’t get higher than 36%.
For those looking for government financing, there are resources that give federal student loans and business loans from the Department of Veteran Affairs.
Military relief societies as an alternative
If you’re in need of quick financing, it’s useful to know that each branch of the military has its own relief society that helps serving and retired service members. Each of them has different programs and rules, and they’re set up in a way that the military can take care of its own. Some of those programs may feature interest-free loans, grants without repayment needed, financial counseling and so on.
What to look for while comparing loan options
First thing’s first – you have to look for a loan that is covered by the MLA and complies with its terms. Other specifics you have to keep an eye on include:
- APR and fees. This is the true cost of your loan, so consider it carefully. You have to be sure you’ll be able to afford it.
- Your eligibility. This depends on a lender and your state, but typically your credit history is a huge factor. Most providers want a client with a good credit score, 600 and higher, but there are those willing to lend to people with a poor score. If your credit history is not the best, try checking out Bad Credit Loans in Minnesota.
- Repayment penalty. Ideally, you don’t want to pay any fees if you’ll want to pay your debt off early.
- Your lender’s license. It is always important to check if the specific provider allowed to operate in a particular state and if they’re subject to any additional guidelines.
A personal loan is a helpful tool for those in a financial crunch. Whether you need a small amount of money, like a $400 loan, or a huge one – there are providers who are willing to offer them to you. To fully take advantage of your place as a military servant or their dependent, look for loans that are covered under the Military Lending Act, to get the lowest fees and best terms possible. Try no to waive this added protection, budget carefully and you won’t dig yourself into the pit of debt.