The Military Lending Act (MLA) sets rules for certain loans to servicemembers and their families. Its best-known limit is a 36% cap on the cost of covered credit, but the law also addresses dispute clauses and loan disclosures. A 2025 Consumer Financial Protection Bureau (CFPB) settlement shows how regulators can pursue more than one alleged violation in the same case.
Who the Military Lending Act covers
Coverage depends on a borrower’s military status and, in some cases, their relationship to a servicemember. The CFPB describes the law as working alongside other federal and state protections, not replacing them. These are the main groups identified in its guidance:
- Active-duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard, and Space Force.
- Reserve members serving on active duty.
- National Guard members serving under qualifying federal orders for more than 30 consecutive days.
- Spouses of covered servicemembers and, in some cases, their dependents.
- A 36% ceiling on the Military Annual Percentage Rate, or MAPR, for covered credit.
- A ban on loan terms that require a covered borrower to use arbitration for a dispute.
- Required disclosures that explain loan terms and costs.
The categories above are a starting point, not a way to determine every individual’s status. For example, the law’s treatment of a National Guard member can depend on the orders involved. The CFPB’s official MLA information is the appropriate place to check general coverage details. A military legal assistance office can help with questions about a particular situation.
What the 36% limit counts
The MAPR is broader than the interest rate printed in a loan advertisement or quoted in a conversation. It is a measure of the cost of credit that can include finance charges, credit insurance premiums, certain add-on credit-related products, and fees such as application and participation fees. The CFPB says a covered borrower cannot be charged more than 36% MAPR.
That broader calculation matters for household budgeting. A borrower comparing two loans by looking only at the stated interest rate may miss other charges that affect the total cost. Under the MLA, the relevant question is not just what interest rate applies, but how the covered charges count toward MAPR.
The available CFPB material does not confirm every fee that may be included or excluded in every circumstance. A reader should not assume that a particular charge is treated one way based on a short summary. For a specific loan, check the CFPB’s current guidance and, if needed, ask a qualified professional to explain how the rules apply.
Arbitration and disclosures are separate protections
The MLA’s protections do not stop at the cost cap. A covered loan agreement cannot require arbitration when a dispute arises. Arbitration is a private process for resolving disputes outside court. The restriction means a covered borrower cannot be made to accept that process as a required contract term.
Lenders also must provide the disclosures required by the law. These written notices help a borrower understand the terms and cost of credit before agreeing. A loan could raise separate concerns if its cost exceeds the MAPR cap, its contract requires arbitration, or required disclosures are missing. The CFPB’s enforcement record shows that these issues can be considered together, rather than as one general complaint about a loan.
What the 2025 CFPB settlement shows
In a July 11, 2025 announcement, the CFPB said it had reached a settlement with a large pawnshop operator and its subsidiaries over alleged MLA violations. The agency alleged that pawn loans to covered borrowers made since October 3, 2016 carried rates above the 36% MAPR limit. It also alleged that loan agreements required arbitration and did not provide all required disclosures.
The CFPB had filed its lawsuit on November 12, 2021. In its announcement, the agency also said the alleged conduct matched terms of a 2013 Bureau order involving a predecessor company. That detail illustrates how an enforcement case can include both the alleged conduct in the current matter and an agency’s account of earlier related history. The allegations should not be treated as a finding that every loan or borrower was affected in the same way.
The parties jointly filed a stipulated final judgment and proposed order, which the court entered the same day, according to the CFPB. The public information available for this article does not establish payment amounts, restitution, or the order’s ongoing compliance requirements. It also does not clarify what happened on July 22, 2025. Readers seeking those specifics should consult the CFPB announcement and the court filings rather than infer terms from the word “settlement.”
Where to check a concern
A borrower who thinks a covered loan may exceed the MAPR limit, require arbitration, or omit required disclosures can contact the CFPB. The Bureau accepts complaints online and by phone at (855) 411-CFPB (2372). Suspected MLA violations can also be reported to the Department of Justice’s Office of Civil Rights. The CFPB’s MLA page points readers to a military legal assistance office locator at legalassistance.law.af.mil.
Those channels can help someone identify the right next questions, but the available sources do not explain how to verify coverage for every loan or what remedy may apply to an individual case. The MLA also operates alongside other laws, and the interaction can depend on the facts. This article is educational, not individualized legal or financial advice. For a specific situation, check official sources or consult a qualified professional.
Source: CFPB Military Lending Act guidance and the CFPB settlement announcement.
Please seek a professional. This article is general information, not financial, tax or insurance advice. Please seek a licensed financial, tax or insurance professional about your own situation.
