Military Lending Act

Our Position

DCUC and its members fully support MLA and its intention to protect servciemembers and their families from predatory lending practices.  Defense Credit Unions provide their members with exceptional product and services that are the better option. Ambiguity in the Department of Defense's 2017 Interpretive Rule has caused several unintended consequences that adversely affect servicemembers.

The restriction of the sale of Guaranteed Asset Protection (GAP) Products to servicemembers is one such consequence. GAP Insurance and GAP Waivers cover the difference between the amount that is owed on a vehicle and the amount the vehicle is worth.

DCUC will continue to advocate on behalf of servicemembers so they have access to the products they need, especially those living in areas prone to natural disasters and for which they are exposed to financial loss.



The Military Lending Act (MLA), was originally enacted in 2006 and implemented by the Department of Defense (DoD) in 2007. The MLA serves to protect active duty members of the military, their spouses, and their dependents (aka “covered borrowers”) from certain lending practices. These practices could pose risks for service members and their families and could pose a threat to military readiness and affect service member retention. The official language can be found in the “John Warner National Defense Authorization Act for Fiscal Year 2007” and is further promulgated in 10 U.S.C. § 987.

Initially, the MLA and its implementing regulation only applied to high-cost payday loans, vehicle title loans and refund anticipation loans involving covered borrowers.

2015 AMENDMENT:  DOD amended its regulation primarily to extend the protections of the MLA to a broader range of closed-end and open-end credit products.


“Losing qualified Service members due to personal issues, such as financial instability, causes loss of mission capability and drives significant replacement costs. The Department estimates that each separation costs the Department $58,250. Losing an experienced mid-grade noncommissioned officer (NCO), who may be in a leadership position or key technical position, may be considerably more expensive in terms of replacement costs and in terms of the degradation of mission effectiveness resulting from a loss of personal reliability for deployment and availability for duty.”

DCUC accepted the amendment as written when enacted in October 2016. However, confusion was created by the DoD’s 14 Dec 2017 Interpretive Rule which did not follow procedural requirements of the Administrative Procedure ActThis interpretive rule addressed GAP Products and eliminated the ability to offer a GAP Product to servicemembers at the time of purchase.


In the News

American Banker, May 27, 2019

CFPB’s Kraninger digs in over halt to military lending exams



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