SCRA & MLA: Complete Guide to Military Financial Protections

Bottom Line Up Front: The Servicemembers Civil Relief Act (SCRA) caps interest on pre-service debts at 6% while you're on active duty. The Military Lending Act (MLA) caps the all-in cost (MAPR) of new consumer credit at 36% while you're on active duty and covers your dependents too. Different debts, different mechanics — and most service members are entitled to both.

Quick Reference: Which Law Applies?

Situation	SCRA	MLA
Credit card opened before military service	6% interest cap	—
Credit card opened while on active duty	—	36% MAPR ceiling on fees + interest
Mortgage from before service	6% interest cap (extends 1 year past separation)	Mortgages excluded
Mortgage taken during service	—	Mortgages excluded
Auto loan from before service	6% interest cap	—
Auto loan taken during service	—	36% MAPR ceiling
Personal / payday / installment loan during service	—	36% MAPR ceiling
Spouse takes out consumer loan during your active duty	—	36% MAPR ceiling (spouse covered as dependent)

Sources: 50 USC § 3937 (SCRA interest cap), 10 USC § 987 (MLA), 32 CFR Part 232 (DoD MLA regulations).

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Table of Contents

• Part 1: Understanding Your Protections
• Part 2: SCRA in Detail
• Part 3: MLA in Detail
• Part 4: How to Claim Each
• Part 5: 2025 CFPB Enforcement Examples
• Part 6: Action Plan

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Part 1: Understanding Your Protections

SCRA in One Paragraph

The Servicemembers Civil Relief Act (50 USC §§ 3901-4043, originally the 1940 Soldiers' and Sailors' Civil Relief Act, modernized in 2003) protects you from a list of civil-side problems that arise because you're on active duty: high pre-service interest rates, eviction without a court order, default judgments while you're deployed, foreclosure, lease termination on PCS, and several others. Its most-used provision is the 6% interest rate cap on pre-service debts. SCRA covers the service member, not dependents.

MLA in One Paragraph

The Military Lending Act (10 USC § 987, expanded by DoD rule in 2015 at 32 CFR Part 232) caps the all-in cost of consumer credit extended to active-duty service members and their dependents at 36% Military Annual Percentage Rate (MAPR). MAPR includes interest plus most fees, credit insurance, and ancillary charges. MLA also bans certain predatory terms (mandatory arbitration, mandatory paycheck allotment, mandatory bank-account access, mandatory vehicle title, mandatory credit insurance). It applies to consumer loans taken during service. Mortgages and most secured purchase-money loans (auto, appliance) are excluded from MLA's MAPR cap, but the prohibited-practices rules still apply broadly.

How They Compare

	SCRA	MLA
What it caps	Interest rate	All-in MAPR (interest + fees + ancillary)
Cap level	6%	36%
When debt was incurred	Before service	During service
Who is covered	Service member only	Service member and dependents
Loan types	Almost all consumer debts	Consumer credit (mortgages and most secured purchase-money loans excluded from MAPR cap)
Activation	You request, in writing, with orders	Automatic if lender properly verifies status
Retroactive	To start of active duty	No
Other protections	Lease, foreclosure, eviction, default judgment, lawsuit stay	Bans on arbitration, allotment, account access, title, mandatory insurance

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Part 2: SCRA in Detail

The 6% Interest Rate Cap (50 USC § 3937)

The cap covers any obligation incurred before entering active service. Common examples:

• Credit cards opened before service
• Mortgages originated before service
• Auto loans from before service
• Federal and private student loans from before service
• Medical debt from before service

Coverage period. The cap applies during military service. For mortgages and "mortgage-like securities" it extends one year after separation; for other debts the cap ends when active duty ends. Source: 50 USC § 3937(a)(1).

What "interest" means here. Per the statute, "interest" includes "service charges, renewal charges, fees, or any other charges (except bona fide insurance)" — meaning a creditor can't dodge the cap by reclassifying interest as fees.

Excess interest is forgiven, not deferred. Once a creditor receives your written notice with orders, the rate is reduced and any interest above 6% accrued from the start of active duty is forgiven outright. The creditor must also reduce the periodic payment by the amount of forgiven interest — they cannot simply stretch the term. See DOJ guidance on the 6% cap.

Housing Protections

Lease termination. PCS orders 35 miles or more from your current location, deployment of 90 days or more, or separation each give you the right to terminate a residential lease with 30 days' written notice. No early-termination fee can be charged. Source: 50 USC § 3955.

Eviction. A landlord cannot evict you (or your dependents from your residence) without a court order if monthly rent is below the indexed cap. A judge can stay the eviction for up to 90 days for service-related reasons. Source: 50 USC § 3951.

Foreclosure. A lender cannot foreclose on a pre-service mortgage without a court order, and a judge can stay the foreclosure for up to 9 months. Source: 50 USC § 3953.

Civil Litigation Protections

Stay of proceedings. You can request a 90-day stay of any civil suit if your service materially affects your ability to participate. Additional stays available on showing. Source: 50 USC § 3932.

Default judgment protection. A court cannot enter a default judgment without a sworn affidavit from the plaintiff regarding your military status; if you are on active duty, the court must appoint counsel and may stay the case. Source: 50 USC § 3931.

Tolling of statutes of limitations. Periods of active service do not count against statutory deadlines for actions you might bring. Source: 50 USC § 3936.

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Part 3: MLA in Detail

The 36% MAPR Cap

MAPR — Military Annual Percentage Rate — includes:

• Periodic interest charges
• Application fees (with limited credit-card carve-outs)
• Participation fees (with limited credit-card carve-outs)
• Credit insurance premiums
• Fees for ancillary products sold with the credit
• Fees for debt cancellation or debt suspension contracts

If the all-in MAPR exceeds 36%, the loan violates the MLA. Source: 32 CFR § 232.4(b).

Worked example: a payday loan.

• Principal: $500
• Fee: $75
• Term: 14 days
• MAPR ≈ ($75 / $500) × (365 / 14) × 100 ≈ 391% — clearly illegal under MLA

Prohibited Practices

A creditor extending consumer credit to a covered borrower may not:

1. Require submission to mandatory arbitration. Source: 32 CFR § 232.8(c).
2. Require unreasonable notice as a condition for legal action.
3. Require the borrower to repay the loan by allotment from military pay.
4. Require direct access to a bank, savings, or other depository account (other than for a one-time refinance, with limited exceptions).
5. Require a vehicle title as security for a non-purchase-money loan.
6. Sell credit insurance, credit-related ancillary products, or debt cancellation/suspension as a mandatory term.

A loan that violates any of these prohibitions is void from inception under 32 CFR § 232.9(c). The borrower may recover what was paid and is entitled to actual damages, plus attorney's fees and court costs.

Who Is a "Covered Borrower"

• Active-duty member of any service (Army, Marine Corps, Navy, Air Force, Coast Guard, Space Force)
• A member of the Reserves serving on active duty
• A National Guard member mobilized under federal orders for more than 30 consecutive days
• Spouse of any of the above
• A child or other dependent of any of the above, if listed in DEERS

Lenders verify status by checking the DoD MLA database at the time the borrower becomes obligated. Once a transaction is opened with covered status, that status governs the account for its life — even if the borrower later separates. Source: 32 CFR § 232.5.

What MLA Does Not Cover

• Residential mortgages (purchase, refinance, home-equity)
• Loans secured by the consumer-purpose vehicle being purchased (auto purchase-money loans), if the lender follows truth-in-lending APR rules
• Loans secured by the consumer-purpose appliance being purchased (purchase-money loans)
• Business credit (the MLA covers consumer credit only)

The exclusions are about MAPR — the prohibited-practices rules and disclosure obligations still apply broadly to consumer credit.

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Part 4: How to Claim Each

SCRA: How to Get the 6% Cap Applied

You must put it in writing with a copy of orders. There is no automatic detection. You have until 180 days after your military service ends to submit the request, but the cap is retroactive to the start of active duty.

1. Pull your debts. Use AnnualCreditReport.com to list every account opened before active duty: credit cards, mortgages, auto loans, student loans, medical collections.
2. Identify which accounts already have rates ≤6%. Skip those — SCRA can't cap something already below the cap.
3. Send each creditor the same packet:
   • Cover letter citing 50 USC § 3937 (template below)
   • Copy of orders (or LES showing active-duty status)
   • Copy of military ID front and back
4. Track responses. Most large issuers process within 30 days. If denied, the creditor must explain why in writing.
5. Verify on next statement. The interest line should reflect the 6% rate; any interest above 6% from the start of active duty should be refunded as a credit.

MLA: How Coverage Works in Practice

You don't apply for MLA coverage — the lender is required to check your status before extending consumer credit. What you do is:

1. Confirm your status in the MLA database before applying for credit.
2. When the lender pulls credit, they (or their service provider) verify your covered-borrower status.
3. The cardmember agreement or loan note must disclose MLA-covered status — look for the "you have been identified as a 'Covered Borrower' under the Military Lending Act" notice on the agreement.
4. If a lender extends credit to you with MAPR above 36% or any prohibited term, the contract is void from inception.

If a lender misses the verification or knowingly extends prohibited credit, file a complaint with the CFPB and contact your installation legal-assistance office.

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Part 5: 2025 CFPB Enforcement Examples

These actions illustrate what an MLA violation looks like in practice and where servicemembers were made whole:

• MoneyLion (April 2025). CFPB filed an amended complaint against MoneyLion Technologies and 37 lending subsidiaries for MLA and CFPA violations on consumer loans extended to covered borrowers between Dec 1, 2017 and Oct 11, 2024. Settled in late 2025 with $1.75 million in redress including pro-rata refunds of membership fees. CFPB filing.
• FirstCash, Inc. (July 2025). CFPB settled a 2021 lawsuit with the operator of 1,000+ retail pawnshops for MLA violations: pawn loans to active-duty borrowers and dependents at rates exceeding the 36% MAPR cap. Result: $5 million in consumer redress and $4 million in civil penalties. CFPB press release.

The lesson: violations do get prosecuted, and redress is real — but the process takes years. File the CFPB complaint as soon as you spot a violation. Don't wait.

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Part 6: Action Plan

One-Time

• Pull your credit report and list every pre-service debt.
• For each pre-service debt above 6%, send an SCRA request packet (template below).
• Confirm your status (and your spouse's) on the DoD MLA database.
• Save the SCRA template letter for the next time you need it.

Before Taking New Consumer Credit

• Check that the lender will verify your status against the MLA database.
• Read for the MLA disclosure language on the agreement.
• Ask for the MAPR figure (not just the APR).
• Walk away if you see mandatory arbitration, mandatory allotment, mandatory account access, or mandatory ancillary products.

When You Get PCS Orders

• Review your current lease for SCRA termination eligibility (35-mile rule).
• Notify the landlord in writing with a copy of orders.
• Cancel month-to-month service contracts you no longer need.

When You Separate

• SCRA's 6% cap ends with active duty. Plan refinancings or rate-shop accordingly.
• MLA coverage on existing accounts continues for the life of those accounts even after you separate. New accounts opened after separation are not covered.

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Template: SCRA Interest Rate Reduction Request

[Your Name]
[Your Address]
[City, State ZIP]

[Date]

[Creditor Name]
[Creditor Address]

Re: Request for SCRA Interest Rate Cap Under 50 USC § 3937

Dear Sir or Madam,

I am an active-duty member of the [Branch] of the United States Armed
Forces. Pursuant to the Servicemembers Civil Relief Act, 50 USC § 3937,
I request that you reduce the interest rate on my account to 6 percent
per year, retroactive to my date of entry on active duty.

Account: XXXX-1234
Date debt was incurred: [pre-service date]
Active-duty start date: [date]

Enclosed:
  1. Copy of military orders
  2. Leave and Earnings Statement
  3. Copy of military ID (front and back)

Please confirm in writing within 30 days:
  1. Reduction of the interest rate to 6 percent effective my active-duty
     start date.
  2. Refund or credit of interest charged above 6 percent from that date
     to present.
  3. The revised periodic payment amount and revised payoff figure.

If you require additional documentation, please contact me at the address
above or [phone] / [email].

Respectfully,

[Signature]
[Rank] [Full Name]

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Template: MLA Violation Complaint to CFPB

File at consumerfinance.gov/complaint — the CFPB's portal handles intake and routes to enforcement. The cover letter below is for your records.

[Your Name and Address]
[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 complaint against [Lender Name] for violation of the
Military Lending Act, 10 USC § 987, and its implementing regulation,
32 CFR Part 232.

Borrower:    [Your Name], Active-Duty [Branch]
Account:     [number]
Loan amount: $[amount]
Loan date:   [date]
Stated APR:  [%]
Fees and ancillary charges:
  - Application fee:   $[amount]
  - Processing fee:    $[amount]
  - Credit insurance:  $[amount]
  - [Other:]           $[amount]
Calculated MAPR: [%]  (exceeds 36% MLA cap)

Violation(s) (mark all that apply):
  [ ] MAPR exceeds 36%
  [ ] No MLA disclosure provided in agreement
  [ ] Mandatory arbitration clause
  [ ] Required paycheck allotment
  [ ] Required bank-account access
  [ ] Mandatory credit insurance / ancillary product
  [ ] Other: [describe]

I was on active duty when this loan was originated. Please investigate
and direct the lender to void the loan and refund payments per
32 CFR § 232.9(c).

Enclosed:
  - Copy of loan agreement
  - Payment history
  - Military ID (active-duty)
  - LES showing active-duty status
  - MAPR calculation worksheet

Respectfully,

[Signature]
[Rank] [Full Name]

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Sources

• 50 USC § 3937 — SCRA 6% interest cap
• 10 USC § 987 — Military Lending Act
• 32 CFR Part 232 — DoD MLA regulations
• DOJ Servicemembers Initiative: 6% interest rate cap explained
• CFPB Military Lending Act page
• DoD MLA database (verify covered-borrower status)
• DoD SCRA database
• CFPB FirstCash settlement (Jul 2025)

Last Verified: May 4, 2026 against the cited sources.

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Use Garrison Ledger Tools

• Ask Military Expert: SCRA / MLA scenario questions answered against the current statutory text.
• LES Auditor: Confirms allotment deductions are legitimate (a common SCRA-adjacent issue).
• PCS Copilot: Calculates the 35-mile-rule lease-termination timing.

Related Guides

• SCRA Credit Card Fee Waiver Guide
• Military Credit Card Strategy

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Bottom Line. Two laws. Pre-service debts get the 6% cap under SCRA on written request. New consumer credit during service can't exceed 36% MAPR under the MLA, with a list of practices banned outright. If you suspect a violation, file with the CFPB and call your installation legal-assistance office. Don't try to negotiate from a position of weakness with a lender who is already breaking the law.