Military Loans Work Loopholes In a Bad Way









by Barbara Nevins Taylor

If you’re in the military and you need money, you may be tempted by a quick cash loan. Let us suggest that you hold that thought. The attractive ads you see online and in the flashing lights of storefront windows are like the big bad wolf knocking at your door.

Stay with me for a minute. The Military Lending Act of 2007 aimed to protect military members and their families.

That law outlawed predatory payday loans for the military.  It defined them as those:

1. For less than $3,000

2. For 91 days or less

3. Vehicle title loans for 181 days or less.

So how is it possible that there is such a big online business where lenders seem to speak exclusively to your club?

These lenders use the loopholes in the law. They just make the loans for a bit longer. And some of these companies charge close to 400% interest.  Sure, you may need cash. But borrowing like this inevitably pulls you deeper into debt and trouble.

Tom Feltner, Director of Financial Services for the Consumer Federation of America (CFA), says, “Very high cost credit options don’t just make it difficult to pay at the next payday. There are long-term security and employment issues that are affected when you end up deeply mired in debt.”

The Department of Defense (DOD) considers this kind of lending risky for individuals and military readiness. A 2006 report said, “Predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.”

DOD repeatedly asked  Congress to close the loopholes. In 2012, the Senate passed a bill that would have done that. But the House wouldn’t go along with it.

So while you are working hard to protect Congress and the rest of the nation, who is protecting you?  You might ask your Congressman.

Feltner and the CFA say the time to make the change is now.  “We think… we need to close the loopholes in the Military Lending Act to protect service members from high-cost abusive forms of credit that are negatively impacting security clearance, readiness and economic security.”

In the meantime, a safe bet is borrowing from a credit union. Here are few, and there are many more.

Navy Federal Credit Union

Navy Army Community Credit Union

Air Force Federal Credit Union

Army Aviation CreditUnion


U.S.Coast Guard Community Credit Union


Let us hear from you.  What do you think?

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Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.