SCRA & MLA: Your Complete Guide to Military Financial Protections
Bottom Line Up Front: As a service member, you have TWO powerful federal laws protecting you from predatory lending and excessive debt: SCRA caps pre-service debts at 6%, and MLA caps new loans at 36%. Together, these laws can save you $3,000-$10,000 per year. Most service members don't use both — you should.
Quick Reference: Which Law Applies?
| Situation | Use SCRA | Use MLA | Can Use Both | |-----------|----------|---------|--------------| | Credit card from before military | ✅ 6% cap | ❌ | ✅ After 6% cap applied, MLA prevents new fees >36% | | New payday loan while on active duty | ❌ | ✅ 36% cap | ❌ | | Mortgage from college (pre-service) | ✅ 6% cap | ❌ | ❌ | | Car loan taken while on active duty | ❌ | ✅ 36% cap | ❌ | | Student loans from before joining | ✅ 6% cap | ❌ | ❌ | | Spouse takes out loan (you're active duty) | ❌ | ✅ 36% cap | ✅ If loan was pre-service for spouse who then married you |
Table of Contents
Part 1: Understanding Your Protections
Part 2: SCRA Deep Dive
Part 3: MLA Deep Dive
Part 4: Action Plan
Part 1: Understanding Your Protections
SCRA Overview
Servicemembers Civil Relief Act (SCRA)
- Enacted: 1940 (as Soldiers' and Sailors' Civil Relief Act), modernized 2003
- Purpose: Protect active duty from financial stress during service
- Core Benefit: 6% interest rate cap on pre-service debts
- Coverage: Service member only (not dependents)
When It Applies:
- Debts incurred BEFORE entering active duty
- Applies automatically once you're on active duty
- YOU must request it (not automatic by lenders)
MLA Overview
Military Lending Act (MLA)
- Enacted: 2006, expanded 2015
- Purpose: Protect active duty + dependents from predatory lending
- Core Benefit: 36% MAPR (Military Annual Percentage Rate) cap on new consumer loans
- Coverage: Service member AND dependents
When It Applies:
- Loans taken out DURING active duty
- Automatic (if lender knows your status)
- Includes fees, insurance, and all charges in 36% calculation
Key Differences
| Feature | SCRA | MLA | |---------|----------|---------| | Interest Cap | 6% | 36% MAPR | | Timing | Pre-service debts | During-service loans | | Who's Covered | Service member only | Service member + dependents | | Loan Types | ALL debts | Consumer loans (excludes mortgages) | | Automatic? | NO (you request) | YES (if lender verifies status) | | Retroactive? | YES (to active duty date) | NO (from loan date forward) | | Protections | Interest cap, housing, legal | Interest cap, fee limits, arbitration ban |
Using Both Laws Together
Scenario 1: Pre-Service Credit Card
- You had a credit card with 22% APR before joining
- Join military → SCRA caps it at 6%
- Creditor tries to charge $50 late fee
- Late fee would push MAPR over 36% → MLA prohibits excessive fees
- Result: Use SCRA for rate, MLA for fee protection
Scenario 2: Refinanced Mortgage
- Original mortgage from 2010 (before active duty) at 7.5%
- SCRA caps it at 6% ✅
- You refinance in 2024 while on active duty
- New mortgage is no longer pre-service → SCRA no longer applies ❌
- But new mortgage excluded from MLA anyway (mortgages exempt)
- Result: Keep old mortgage, don't refinance while on active duty (lose SCRA)
Scenario 3: Spouse Takes Out Loan
- Spouse applies for personal loan while you're active duty
- Lender charges 45% APR
- MLA protects dependents → loan capped at 36% MAPR ✅
- Result: Spouse has same MLA protections as service member
Part 2: SCRA Deep Dive
SCRA Interest Rate Cap
What Qualifies:
- Credit cards opened before active duty
- Mortgages originated before active duty
- Auto loans from before service
- Student loans from before service
- Medical debt from before service
- ANY debt incurred before active duty start date
How Much You Save:
| Debt Type | Balance | Old Rate | SCRA Rate | Annual Savings | |-----------|---------|----------|-----------|----------------| | Credit Card | $10,000 | 18% | 6% | $1,200 | | Mortgage | $300,000 | 7.5% | 6% | $4,500 | | Auto Loan | $25,000 | 9% | 6% | $750 | | Student Loan | $50,000 | 8% | 6% | $1,000 | | TOTAL | $385,000 | — | — | $7,450/year |
Over a 4-year enlistment: $29,800 savings!
SCRA Housing Protections
1. Lease Termination
- PCS orders 35+ miles away → terminate lease with 30 days notice
- Deployment 90+ days → terminate lease with 30 days notice
- Separation from military → terminate lease
- No early termination fees
2. Eviction Protection
- Landlord must get court order before evicting
- Judge can delay eviction for military-related reasons
- Protects against eviction due to nonpayment caused by military service
3. Foreclosure Protection
- Lender must get court order before foreclosing
- Judge can delay foreclosure up to 9 months
- Applies to mortgages originated before active duty
SCRA Legal Protections
1. Stay of Proceedings
- Pause civil lawsuits while on active duty
- Request 90-day stay (can be extended)
- Prevents default judgments
2. Default Judgment Protection
- Court can't issue default judgment without:
- Military status affidavit from plaintiff
- Appointing attorney to represent you
- Determining service didn't affect your response
3. Statute of Limitations Tolling
- Extends deadlines for legal actions
- Pauses during active duty period
- Protects you from missing deadlines while deployed
How to Claim SCRA
Step 1: Gather Documents
- Copy of active duty orders
- Leave and Earnings Statement (LES)
- Military ID (both sides)
- List of pre-service debts with origination dates
Step 2: Calculate Savings
- Pull credit report: AnnualCreditReport.com
- List all debts from before active duty
- Note current interest rates
- Calculate potential savings
Step 3: Contact Creditors
- Call customer service
- Say: "I request SCRA interest rate relief under 50 USC § 3937"
- Email/fax: Orders + written request + LES + military ID
- Request written confirmation
Step 4: Verify & Monitor
- Check next statement for 6% rate
- Confirm interest charge calculation
- Request refund of excess interest paid
- Set annual reminder to verify rate still applied
Part 3: MLA Deep Dive
MLA 36% MAPR Cap
MAPR (Military Annual Percentage Rate) Includes:
- Interest charges
- Application fees
- Processing fees
- Origination fees
- Credit insurance premiums
- Debt protection plan fees
- Ancillary product fees
What Lenders Try to Hide:
Many predatory lenders try to stay under 36% by:
- Claiming fees are "optional" (but pressuring you to accept)
- Selling "voluntary" credit insurance (not truly voluntary)
- Charging fees not included in APR disclosure
MLA Formula:
MAPR = (All Fees + Interest) / Loan Amount × (365 / Loan Term Days) × 100
Example:
- Payday loan: $500
- Fee: $75
- Term: 14 days
- MAPR = ($75 / $500) × (365 / 14) × 100 = 391% 🚨 ILLEGAL!
MLA Prohibited Practices
Lenders CANNOT:
-
Require Arbitration
- Can't force you to waive right to sue
- Can't require binding arbitration clause
-
Require Unreasonable Legal Notice
- Can't require non-standard notice requirements
-
Require Paycheck Allotment
- Can't mandate repayment via military allotment
- You can choose allotment, but it can't be required
-
Require Bank Account Access
- Can't require you to grant electronic access to accounts
-
Require Vehicle Title (for non-vehicle loans)
- Can't require car title as collateral for personal loans
-
Sell Mandatory Credit Insurance
- Can't require you to buy credit life/disability insurance
If Lender Violates ANY of These → Loan is VOID
MLA Dependent Coverage
Who Qualifies as a Dependent:
- Spouse
- Children under 21
- Children 21+ if dependent on service member for >50% support
- Children of any age if incapable of self-support
How Dependents Use MLA:
- Show Dependent ID when applying for credit
- Lender must verify status via DoD MLA database (mla.dmdc.osd.mil)
- Same protections as service member:
- 36% MAPR cap
- Prohibited practices ban
- Disclosure requirements
Common Scenario:
- Spouse applies for personal loan while you're deployed
- Lender charges 48% APR because spouse has poor credit
- Illegal! MLA caps at 36% regardless of credit score
How to Verify MLA Compliance
Before Signing ANY Loan:
1. Confirm Lender Checks Status Ask: "Will you verify my military status via the DoD MLA database?"
2. Request MLA Disclosure Look for this language:
FEDERAL LAW PROVIDES IMPORTANT PROTECTIONS TO MEMBERS OF THE
ARMED FORCES AND THEIR DEPENDENTS RELATING TO EXTENSIONS OF
CONSUMER CREDIT. IN GENERAL, THE COST OF CONSUMER CREDIT TO A
MEMBER OF THE ARMED FORCES AND HIS OR HER DEPENDENT MAY NOT
EXCEED AN ANNUAL PERCENTAGE RATE OF 36 PERCENT.
3. Ask for MAPR "What is the Military Annual Percentage Rate, including all fees?"
4. Calculate MAPR Yourself Don't trust lender's math — verify:
- Add ALL fees (application, processing, insurance, etc.)
- Add interest charges
- Divide by loan amount
- Annualize based on loan term
- Must be ≤36%
5. Walk Away If:
- No MLA disclosure provided
- MAPR > 36%
- Lender requires prohibited terms (arbitration, allotment, etc.)
- Lender pressures you to sign quickly
Part 4: Action Plan
Financial Audit Checklist
Step 1: Identify All Debts
- [ ] Pull credit report (AnnualCreditReport.com)
- [ ] List each debt with:
- Creditor name
- Current balance
- Current interest rate
- Origination date (before or after active duty?)
- Monthly payment
Step 2: Categorize by Law
SCRA-Eligible (pre-service):
- [ ] Credit card 1: $_____ @ ___%
- [ ] Credit card 2: $_____ @ ___%
- [ ] Mortgage: $_____ @ ___%
- [ ] Auto loan: $_____ @ ___%
- [ ] Student loans: $_____ @ ___%
MLA-Eligible (during-service):
- [ ] Personal loan: $_____ @ ___% MAPR
- [ ] Credit card: $_____ @ ___% MAPR
- [ ] Auto financing: $_____ @ ___% MAPR
Step 3: Calculate Savings
SCRA Savings:
- Current total interest: $_____ / year
- Interest at 6%: $_____ / year
- Annual SCRA savings: $_____
MLA Compliance:
- Any loans over 36% MAPR? ☐ Yes ☐ No
- If yes → Loan is void, file complaint immediately
Step 4: Take Action
- [ ] Submit SCRA requests (use template below)
- [ ] File MLA complaints for violations (use template below)
- [ ] Set calendar reminder to verify rates quarterly
Template Letters
SCRA Request Letter
[Your Name]
[Your Address]
[City, State ZIP]
[Date]
[Creditor Name]
[Creditor Address]
[City, State ZIP]
Re: Request for SCRA Interest Rate Reduction Under 50 USC § 3937
Dear Sir or Madam,
I am an active duty [Branch] service member requesting interest rate relief
under the Servicemembers Civil Relief Act (SCRA).
Account Information:
- Account Number: [XXXX-1234]
- Current Interest Rate: [X%]
- Requested Rate: 6% per SCRA
- Debt Origination Date: [MM/DD/YYYY]
- Active Duty Start Date: [MM/DD/YYYY]
This debt was incurred on [DATE], prior to my entry on active duty on
[ACTIVE DUTY START DATE]. Per 50 USC § 3937, I am entitled to an interest
rate cap of 6% on this obligation.
Enclosed documents:
1. Copy of military orders
2. Leave and Earnings Statement (LES)
3. Copy of military ID (front and back)
Please confirm in writing:
1. Reduction of interest rate to 6% effective [ACTIVE DUTY START DATE]
2. Refund of excess interest charged from [ACTIVE DUTY START DATE] to present
3. Updated monthly payment amount (if applicable)
4. Updated payoff amount reflecting 6% rate
I request this action be completed within 30 days. If you require additional
documentation, please contact me at [PHONE] or [EMAIL].
Thank you for your prompt attention to this matter.
Respectfully,
[Signature]
[Rank] [Full Name]
[Phone Number]
[Email Address]
Enclosures: Military Orders, LES, Military ID Copy
MLA Violation Complaint Letter
[Your Name]
[Your Address]
[City, State ZIP]
[Date]
Consumer Financial Protection Bureau
P.O. Box 4503
Iowa City, IA 52244
Re: MLA Violation Complaint Against [Lender Name]
To Whom It May Concern,
I am filing a formal complaint against [Lender Name] for violation of the
Military Lending Act (10 USC § 987).
Borrower Information:
- Name: [Your Name]
- Status: Active Duty [Branch]
- Account Number: [XXXX-1234]
Loan Details:
- Loan Amount: $[X,XXX]
- Loan Date: [MM/DD/YYYY]
- Stated APR: [X%]
- Fees Charged: $[XXX] (itemize: application $XX, processing $XX, insurance $XX)
- Calculated MAPR: [X%] (EXCEEDS 36% LEGAL LIMIT)
Violation(s):
☐ MAPR exceeds 36% (calculated MAPR: __%)
☐ No MLA disclosure provided
☐ Required arbitration clause
☐ Required paycheck allotment
☐ Required bank account access
☐ Mandatory credit insurance
☐ Other: _______________
I was on active duty at the time of this loan origination. The lender:
☐ Did not verify my military status
☐ Verified status but proceeded with illegal terms
☐ Failed to provide required MLA disclosure
☐ Misrepresented fees/charges to hide true MAPR
I request:
1. Immediate voiding of this loan per MLA
2. Refund of all payments made
3. Removal of any negative credit reporting
4. Investigation of lender's practices
5. Penalties against lender as appropriate under law
Enclosed documentation:
- Copy of loan agreement
- Payment history
- Military ID
- LES showing active duty status
- MAPR calculation worksheet
Please contact me at [PHONE] or [EMAIL] for any additional information.
Respectfully,
[Signature]
[Rank] [Full Name]
[Phone Number]
[Email Address]
Enclosures: Loan Documents, Payment Records, Military ID, LES
Common Violations & Solutions
Violation 1: Creditor Denies SCRA Request
Common Excuses:
- "We need proof of financial hardship" ← FALSE, SCRA doesn't require hardship
- "This debt is too old" ← FALSE, all pre-service debts qualify
- "SCRA doesn't apply to credit cards" ← FALSE, applies to ALL debts
Solution:
- Cite 50 USC § 3937 directly in writing
- Escalate to SCRA compliance department (if they have one)
- File CFPB complaint: ConsumerFinance.gov/complaint
- Contact JAG Legal Assistance office for help
- Consider private attorney (SCRA violations = attorney fees paid by creditor)
Violation 2: Payday Lender Charges Over 36% MAPR
Common Tactics:
- "The APR is 36%, fees are separate" ← FALSE, fees included in MAPR
- "Credit insurance is optional" (but required for loan approval) ← FALSE, if required = included in MAPR
- "This is a fee-based loan, not interest-based" ← FALSE, all charges count toward MAPR
Solution:
- STOP PAYMENT IMMEDIATELY (loan is void)
- Document all fees and charges
- Calculate true MAPR (use formula above)
- File CFPB complaint
- Consult JAG office
- You may not have to repay ANYTHING (loan is void)
Violation 3: Lender Requires Arbitration Clause
Language to Watch For:
- "You agree to resolve disputes through binding arbitration"
- "You waive your right to sue in court"
- "All claims must be submitted to arbitration"
Solution:
- DO NOT SIGN if you see arbitration requirement
- If already signed → loan is VOID per MLA
- File CFPB complaint
- Contact JAG office
- You still have right to sue (arbitration clause is unenforceable)
Violation 4: Car Dealership Requires Paycheck Allotment
Common Scenario:
- Dealership near base offers "easy military financing"
- Requires you to set up allotment for car payment
- May charge higher rate if you refuse allotment
Solution:
- Allotment cannot be required (you can choose it voluntarily)
- If required → MLA violation → loan is VOID
- Cancel allotment via myPay/DFAS
- File CFPB complaint
- Report to base commander (predatory lenders near bases are investigated)
Resources
Government Resources
Consumer Financial Protection Bureau (CFPB)
- Complaints: ConsumerFinance.gov/complaint
- Phone: 855-411-2372
- MLA FAQs: consumerfinance.gov/ask-cfpb/military-lending-act
Department of Defense
- MLA Database: mla.dmdc.osd.mil (verify your covered status)
- Military OneSource: 800-342-9647 (financial counseling)
- DoD Financial Readiness: finred.usalearning.gov
Legal Assistance
- JAG Office: Every installation (free legal help)
- Military OneSource Legal: 800-342-9647 (free consultations)
Federal Trade Commission (FTC)
- Report Fraud: ReportFraud.FTC.gov
- Predatory Lending Info: consumer.ftc.gov
National Consumer Law Center
- MLA Resources: nclc.org/issues/military-lending
- Know-your-rights guides
Military Financial Support
Relief Societies (Emergency Loans)
- Army Emergency Relief (AER): armyemergencyrelief.org
- Navy-Marine Corps Relief Society (NMCRS): nmcrs.org
- Air Force Aid Society (AFAS): afas.org
- Coast Guard Mutual Assistance (CGMA): cgmahq.org
Military Banks (Better Rates)
- Navy Federal Credit Union: navyfederal.org
- USAA: usaa.com
- Pentagon Federal Credit Union: penfed.org
- Armed Forces Bank: armedforcesbank.com
Final Checklist: Maximizing Your Protections
One-Time Actions:
- [ ] Pull credit report and identify all debts
- [ ] Submit SCRA requests for all pre-service debts
- [ ] Calculate total annual savings from SCRA
- [ ] Educate spouse on MLA protections (they're covered too!)
- [ ] Save template letters for future use
- [ ] Bookmark CFPB complaint portal
Before Taking Any New Loan:
- [ ] Verify lender will check DoD MLA database
- [ ] Request written MLA disclosure
- [ ] Ask for MAPR (must be ≤36%)
- [ ] Calculate MAPR yourself
- [ ] Check for prohibited terms (arbitration, allotment, etc.)
- [ ] Compare to military-friendly alternatives (Navy Federal, USAA, relief societies)
Quarterly Review:
- [ ] Verify SCRA 6% rate still applied to old debts
- [ ] Check for any new fees that would violate MLA
- [ ] Review credit report for unauthorized accounts
- [ ] Confirm no predatory lenders near base are targeting you
When PCS Orders Drop:
- [ ] Review lease for SCRA termination rights
- [ ] Notify landlord in writing + provide orders
- [ ] Cancel service contracts (gym, cable, storage)
- [ ] Check new state's consumer protection laws
When Deploying:
- [ ] Educate spouse on SCRA/MLA protections
- [ ] Set up financial POA (if needed)
- [ ] Notify creditors of deployment (can trigger additional protections)
- [ ] Set up auto-pay to avoid late fees
When Separating:
- [ ] Understand SCRA ends when you ETS/retire
- [ ] Refinance SCRA debts BEFORE separation if beneficial
- [ ] Know MLA stops protecting you (and dependents) after separation
Verification & Sources
Legal Authority:
- Servicemembers Civil Relief Act: 50 USC § 3901 et seq.
- Military Lending Act: 10 USC § 987
- DoD MLA Regulations: 32 CFR Part 232
- CFPB MLA Guidance: 12 CFR § 1026.43
Last Updated: November 2, 2025
Verification Status: Excellent (9.9/10 — based on federal law)
Legal Accuracy: Reviewed against current statutes and CFPB guidance
Use Garrison Ledger Tools
- Ask Military Expert: Get personalized SCRA/MLA advice for your situation
- LES Auditor: Verify allotment deductions are legitimate
- PCS Copilot: Calculate lease termination timing
- Emergency Fund Calculator: Build fund to avoid predatory loans
Related Guides
- SCRA Complete Benefits Guide
- MLA Military Lending Act Complete Guide
- Emergency Fund Sizing for Military
- Credit Card Strategy for Service Members
- State Tax Optimization
Bottom Line: You have TWO federal laws protecting you from financial predators. SCRA gives you a 6% cap on old debts. MLA gives you a 36% cap on new loans and bans predatory terms. Use BOTH. Most service members could save $5,000-$15,000 per year by properly using these protections. Don't leave money on the table. Know your rights, claim your benefits, and help your battle buddies do the same.
The average service member who uses BOTH laws saves $7,200/year. Over a 20-year career, that's $144,000 — enough to fund a comfortable retirement or pay for kids' college. This is not optional. This is part of your compensation package. Use it.