Military borrower protections
SCRA and MLA begin at different points
SCRA
Qualifying obligations incurred before service; six percent interest protection and civil-procedure rights.
MLA
Covered consumer credit entered while the person has covered-borrower status; 36 percent MAPR and contract restrictions.
Covered borrowers and consumer credit
Coverage depends on the borrower’s covered status when the transaction is established and on whether the product is covered consumer credit. Creditors can use the Department of Defense database or a qualifying consumer report method to obtain a safe harbor for the covered-borrower determination.
Federal student loans made under Title IV are excluded. Private education loans and institutional credit require transaction-specific analysis; an education purpose alone does not place the credit inside or outside the MLA.
MAPR is not the same as APR
The MLA caps the Military Annual Percentage Rate at 36 percent for covered credit. MAPR can include charges that are not included in the TILA annual percentage rate. A transaction can therefore have an APR below 36 percent while its MAPR calculation requires separate attention.
Disclosures and contract restrictions
Covered transactions require the MLA statement of MAPR, applicable Regulation Z disclosures, and a clear payment-obligation description, with specified oral delivery. The regulation also restricts mandatory arbitration, waiver of legal rights, certain military allotments, prepayment penalties, and specified access to deposit accounts.
Official examples & tools
- 32 CFR § 232.6 model MAPR statementThe Defense Department regulation contains a model statement illustrating the required MAPR disclosure.
MLA and SCRA serve different functions
The MLA focuses on covered credit extended while a consumer has covered-borrower status. The SCRA generally protects qualifying obligations incurred before military service and provides procedural protections during service. The same borrower can encounter the statutes at different times.
Borrower timing and covered credit
MLA covered-borrower status is tested when the credit transaction is entered into or the account established. Covered consumer credit generally is personal, family, or household credit with a finance charge or a written agreement payable in more than four installments, subject to exclusions. Title IV loans are generally excluded because they are exempt from Regulation Z; qualifying private education loans and institutional credit can be covered.
Part 232 supplies a safe harbor for timely status checks through the Defense database or a qualifying consumer-report indicator, with record-retention conditions. The determination is transaction-specific.
MAPR, terms, and remedies
The 36 percent Military Annual Percentage Rate can include finance charges, credit insurance, debt-cancellation or suspension products, and other covered fees. It is not the same calculation as Regulation Z’s APR. Covered transactions also require the MLA statement, applicable Regulation Z disclosures, and a payment-obligation description, including specified oral delivery.
The Act restricts mandatory arbitration, legal-rights waivers, prepayment penalties, certain military allotments, and specified access to deposit accounts. Noncompliant credit agreements can be void from inception, and civil remedies are available. State law giving greater protection to covered borrowers generally survives.