Military Cash Advance Loans Now Illegal

According to the FY 2007 Military Authorization Act, military cash advance loans and car title loans to members of the armed forces are now illegal. The law also prohibits all lenders from charging military members interest rates higher than 36%.

For loans to members of the armed forces, lenders must calculate interest rates in a certain way. Specifically, all fees, renewal charges, service charges, credit insurance premiums, and all other expenses must be included in the interest rate.

The law is a response to reports of military members paying interest rates of up to 800% annually on loans. The Department of Defense recommended that Congress pass the law last August.

The legislation is expected to shut down all of the cash advance loan stores that can be found outside of virtually every major U.S. military base. Lenders who violate the law will have to pay fines and serve up to one year in prison.