Passage of SA 4331: Consumer Credit for Service Members
Amendment to S2766/HR5221,
2007 Defense Authorization Bill
Congress protects military families from predatory lenders
"After the Pentagon reported that widespread abuse of military borrowers by predatory lenders was hurting military families and undermining military readiness, Congress moved to cap annual interest rates for loans to military borrowers at 36%, the usury cap many states enforce on their smallest loans to prevent loan sharking.
Senators Jim Talent (R-MO) and Bill Nelson (D-FL) introduced an amendment to the Defense Authorization bill, which passed Congress on September 30, 2006. In addition to the 36% cap on annual interest rates, the amendment prohibits use of a personal check or other method to access the borrowers bank account, or the title to their vehicle as collateral for a small loan. The law will take effect October 2007, unless the Department of Defense works to make it effective sooner.
Troops are targeted with abusive high-cost loans. Military bases are like big fishponds to payday lenders - full of young, financially inexperienced families trying to get by on modest pay. Payday lenders specifically target the military, according to professors at the University of Florida and California State University-Northridge. The industry's own numbers show military personnel are three times as likely as civilians to be victims.
Passage of the Talent-Nelson amendment bodes well not only for military families, but for all borrowers who have been trapped in predatory loans. The national 36 percent usury cap will be a powerful force for reform."
After October 2007 borrowers had to sign paperwork stating that they were not active duty or a dependent of active duty military personnel. IF SO THAT WAS IT. They WOULD NOT LEND allow the person to reborrow. We know what he reason was -- they would not lower their rate to the mandated 36% rate. This should apply to Social Security recipients or anyone trying to eek out a living based on the minimum wage.
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