The MLA, or Military Lending Act, was put into law in 2006. For some time, people who were in military service and needed to take out small loans were getting into debt. Sadly, many companies took advantage of these people and would raise interest rates and charge huge late payment fees. This meant that many service members ended up in huge debt, with no way to reasonably pay it off. To remedy this problem, the MLA was brought into action. This article aims to explain what the MLA is and what it does for service members.
The MLA Is There To Protect
Firstly, the MLA exists to protect. It protects service members from being extorted by loan companies. The primary function is to cap annual interest rates for consumer loans, which is usually 36%. The Military Lending Act also bans early repayment charges on loans taken out by service members. The MLA also has a clause that disallows lenders to try to coerce service members from waiving their rights to these protections and signing a document that would allow the lenders to do whatever they liked. The MLA’s primary function is to protect service members.
Who Does The MLA Protect?
The MLA was originally set up to protect members of the armed forces but its protection extends to members of the Navy, Marine Corps, Air Force, Coast Guard, and National Guard. What’s great about the MLA is that it also protects all dependents of the armed service member, for children up to the age of 21, or 23 if they are a student. These protections also cover the spouses of the service member. The scope of the MLA is broad and protects every type of service member and their families.
What Type Of Loans Are Covered?
The MLA focuses on consumer loans but also covers some traditional bank loans too. The types of loans covered by the MLA are; installment loans, short-term loans, tax refund anticipation loans, vehicle title loans, pawn loans, and overdraft lines of credit. The protections of the MLA do not cover all loan types, however. The type of loans that are not covered are; mortgages, mortgage refinance loans, home equity loans and lines of credit, auto loans, and personal property loans secured by the property (boats, RVs, etc.). Although the MLA covers many different types of loans it does not cover every type out there.
Who Is Eligible?
Technically all service members should be eligible for the MLA. However, the onus is on the lender to verify if you are eligible to be covered by the MLA protections. Most companies will use a piece of software called MLA Verify which checks you against a database in the Department of Defence, where they hold all records of past and present service members. If you feel that you should qualify but the lender disagrees, you may need to contact your local authority to find out what has happened. There may be a reason why you no longer qualify or it might be the lender trying to get away with not having to comply with the regulations. Either way, you should seek help to resolve the issue.
What Happens If A Lender Breaks The Rules?
If a lender is found to have breached the MLA there are very serious consequences. If you file a complaint against a company and win, that company will have to repay the principal sum of the loan to you and any interest you paid. You may also receive damages, of a value not less than $500. All of your legal fees will also be covered by the company that breached the MLA. There may be additional punitive charges held against the company depending on the local laws. The long and short of it is that it is very costly for a lender to break the rules. If you feel that you have fallen foul of a company not adhering to the MLA then, if you are right, there will be no charge for your complaint.
The Importance Of The MLA
Many lives of service members have been ruined by loan companies exploiting them. Service members traditionally do not always have an easy time readjusting to normal life and money can often be very tight. It is a country’s duty to protect those who fight to protect us. The introduction of the MLA 15 years ago has helped service members integrate back into society and live happy lives. The protections that the MLA brings will be a key part of making sure that all future service members are not left behind.