The bipartisan Veterans and Consumers Fair Credit Act extends the Military Lending Act’s 36% interest rate cap on consumer loans to all Americans, especially Veterans and Gold Star Families.

Passed in 2006, the Military Lending Act (MLA) currently caps interest rates on loans at 36% for active duty service members and their families. However, Veterans and Gold Star Families are not protected leaving them especially susceptible to the financial and mental health problems associated with predatory payday loans. Predatory lenders target Veterans and their families by using specialized marketing to appeal to members of the military. The protections of the MLA that applied to Veterans when they were active duty no longer apply once they leave the military, leaving them exposed to financial exploitation. It’s time to hold these predatory lenders accountable by passing the Veterans and Consumers Fair Credit Act of 2021 and cap interests rates at 36% for Veterans and all Consumers.

Polling data and every ballot referendum held on the subject show that super-majorities of Republican, Democratic and Independent voters alike support reestablishing traditional interest rate limits. For example, in 2016, 75% of South Dakotans voted to cap rates at 36%.

What is the VCFCA?

The Veterans and Consumers Fair Credit Act of 2021 would eliminate high-cost, predatory payday loans, auto- title loans, and similar forms of toxic credit across America by:

Reestablishing a simple, common sense limit on predatory lending: The bill would extend the Department of Defense’s 36% interest rate cap to all Americans. This would simply reestablish usury laws that were in force in virtually every state throughout most of the twentieth century.

Preventing hidden fees and loopholes: The 36% rate cap is based on the Pentagon’s successful rules that include all additional fees or add-ons. A federal law is necessary to stop evasions and protect all Americans.

Preserving options to address budgetary shortfalls: The Department of Defense’s approach is time-tested and proven. Active duty service members are still able to make ends meet including through non-credit means, such as payment plans with utilities, and with credit from banks, credit unions, finance companies, fintech companies, and retailers.

Maintaining low industry compliance costs from compromise rules already in effect: Compliance costs for industry will be low because creditors should already know how to comply for active duty military and their families.

Upholding stronger state protections: States like Arkansas, South Dakota, North Carolina, Colorado, New Hampshire, New York, and Montana already have strong interest rate caps. Existing laws will not be impacted because the bill does not preempt any provision of State law that provides greater protections to consumers.