2015 Military Lending Act (MLA) Final Rule for Service Members – Consumer Credit

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Q:   How does the 2015 MLA rule define consumer credit?
A:   Under the final rule, MLA protections apply to any "credit offered or extended to a covered borrower primarily for personal, family, or household purposes, and that is subject to a finance charge or payable by a written agreement in more than four installments."  As a result, the DOD’s final rule applies to all forms of vehicle title loans, installment loans, unsecured open-end lines of credit, payday loans, refund anticipation loans, credit cards, and deposit advance loans. 
The rule contains certain exceptions.  For example, consumer credit would not include:
  • a residential mortgage secured by a dwelling
  • credit for financing the purchase of a motor vehicle, secured by that vehicle
  • credit for financing the purchase of personal property, secured by that property
  • credit that is an exempt transaction for the purposes of Regulation Z (other than a transaction exempt under 12 CFR 1026.29) or otherwise is not subject to Reg. Z disclosure requirements
  • any credit transaction for which the creditor determines the consumer is not a covered borrower

ADDITIONAL INFORMATION:  See details in the Department of Defense’s 2015 Final Rule on “Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,” here:  https://www.federalregister.gov/articles/2015/07/22/2015-17480/limitations-on-terms-of-consumer-credit-extended-to-service-members-and-dependents

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