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Hey there! Just wanted to let you know that if you serve in the army or are a veteran, you can definitely get a payday loan. In fact, in 2017, around 44% of the US military service members borrowed a payday loan at least once.
Now, when it comes to borrowing a payday loan as a military member, there are a few things to consider. Don’t worry though, this guide will provide you with all the details you need. It will explain the differences in further detail, including important features like the Military Lending Act (MLA) and the 36% Military Annual Percentage Rate (MAPR) interest cap for short-term loans.
Understanding Payday Loans: A Helpful Explanation
A payday loan is a useful financial solution for individuals who require a short-term loan to cover their expenses until their next payday. This option is particularly beneficial for those dealing with unexpected situations like medical bills or funeral costs. It allows borrowers to quickly obtain the necessary funds to manage their bills without waiting for their next paycheck.
Typically, payday loans are repaid within 2 to 4 weeks with added interest. To facilitate repayment, the lender will directly withdraw the agreed-upon repayment amount from the customer’s checking account. However, it is crucial for borrowers to carefully consider their ability to repay the loan. Failure to do so can result in additional charges and fees, which should be avoided.
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What Are The Payday Loan Regulations For Army Members?
The regulations for payday loans for military personnel are governed by the MLA of 2006, a federal law that offers special lending protection to active service members, reserve component members who have been activated for 30 days or longer, as well as spouses and certain dependents who are part of the Defense Enrollment Eligibility Reporting System (DEERS). To ensure compliance with these regulations, lending companies must abide by the following rules:
|Are Payday Loans Allowed?||Yes|
|Mandatory Waivers Of Legal Rights||No|
|Early Repayment Penalty||No|
Most fees and charges are already included in the MAPR. Therefore, if a loan surpasses the 36% interest cap or violates any other MLA terms, creditors are prohibited from granting payday loans to active army members to avoid potential penalties. Army members can gain further insights into payday lending restrictions and their rights as service members by reaching out to their local Judge Advocate General’s (JAG) office.
What Are The Advantages of Applying for a Payday Loan as an Army Member?
The primary advantage of applying for a payday loan as a member of the army is the protection it offers against predatory lending. With the 36% Military Annual Percentage Rate (MAPR), military personnel are safeguarded from being charged excessive interest rates. This allows army members to obtain short-term loans with less concern compared to individuals in other professions who may be subject to higher rates, depending on the state.
In addition to avoiding high interest rates, finance charges are typically included in the MAPR, and there are no rushed paperwork or extra fees for borrowers with poor credit scores.
Are the APR Rates for Payday Loans Different for Army and Non-Army Members?
Yes, there is a distinction in the APR rates offered to military and non-military members for payday loans. According to federal law, there is a maximum limit of 36% interest for all payday loans provided to military members as part of the Military Lending Act (MLA).
However, it’s important to note that regulations regarding payday loans also exist for non-military members. Some US states impose a maximum interest rate that can be charged. For example, payday loans in Florida have a maximum interest rate cap of 304%, while payday loans in Alabama have a cap of 456%.
Nevertheless, there are four states where the interest rates are the same for both military and non-military members. These states, which include Colorado, Montana, New Hampshire, and South Dakota, have a 36% cap for all borrowers. In addition, they prohibit the imposition of any extra fees or charges.
Can All Army Members Get a Payday Loan?
It’s important to note that not all military members are guaranteed a payday loan. There are certain restrictions that may prevent someone from borrowing money this way. For example, if you are based in one of the 13 US states where payday loans are illegal, you won’t have the option to apply for one. These states include:
However, if you are based in one of the 37 US states where payday loans are legal, you will most likely be eligible to apply and receive a payday loan. Some of these states include Alabama, Colorado, California, Illinois, Iowa, Kentucky, and Tennessee, just to name a few.
Looking for Alternatives to Applying for a Payday Loan?
If you’re in need of funds, there are several alternatives to consider rather than taking out a payday loan. One option is to reach out to your family or friends for a loan. Another option is contacting your bank to discuss setting up an authorized overdraft. Members of the military could explore the possibility of a cash advance or applying for a credit card, but it’s important to carefully review the interest rates and terms associated with these options.
If you’re an army member, you could also think about selling any unwanted items you no longer need to your fellow servicemen. Online platforms like eBay can provide a convenient way to connect with potential buyers. Additionally, it’s a good idea to start building an emergency fund in a savings account for unforeseen expenses. This will offer you added financial security when urgent payments arise.