Military Members Get Interest Rate Help

 

New York State took an important step to help protect military members from outrageously high interest loans whether or not they are permanent residents of New York State.  And it’s about time military members get interest rate help.

Since 2006, a loophole in New York law allowed lenders to make loans with interest rates as high as 36 percent to military members, even though the state caps interest rates, for everyone else, at between 16 to 25 percent depending upon the circumstances.

This essentially gave permission for lenders  to set up shop near military bases to make payday and other kinds of loans. One company, Omni Military Lending, near Fort Drum in upstate Evans Mills, New York, had legally been making loans at interest rates of 36 percent, according to Governor Andrew Cuomo’s office.

The company and others fell under the so-called  Fort Drum Loophole, which allowed them to take advantage just because someone serving in the military listed a permanent address outside of New York State.

That changed with an executive order issued by Governor Andrew Cuomo on July 6, 2015.  “Jacking up the interest rates on loans made to military service members to make a greater profit is simply unacceptable, and it will not be tolerated in the State of New York. This action will help protect military service members and their families from predatory lending, and companies should know that we will not hesitate to crack down on bad actors,” Governor Cuomo said in a news release.

Omni Military Lending will apparently continue in business but will fall under the regulation of the New York State Department of Financial Services.

Governor Cuomo’s office also plans to continue to crack down on illegal online lending by military lenders. The state has taken aggressive action to try to rein in online payday loans, and online loans to military members.

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Barbara Nevins Taylor

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