In 2006, Congress passed the Military Lending Act, which was designed to prevent predatory lenders from targeting men and women in uniform. But a new report from ProPublica and Marketplace entitled Beyond Payday Loans suggests aggressive lenders have merely shifted tactics and are still very actively going after military personnel.
Rather than a loophole, installment loan companies and so-called payday lenders have found huge gaps in the Military Lending Act, says Paul Kiel, a ProPublica reporter and co-author of the series. “We found in states that allow these types of products the [legislation] defined what it targeted pretty narrowly.”
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As Marketplace reports: The Military Lending Act set a national interest rate cap of 36 percent APR (annual percentage rate) for loans to military members and their families (excluding mortgages and auto finance loans).
The Act covered three specific types of loans: payday loans (short-term, due in one lump sum after a borrower’s payroll check