Service Member - Predatory Lending | Attorney General - State of Colorado

Service Member - Predatory Lending

Suited Man Handing You Money

Scammers attempt to take advantage of an individual’s need for quick access to money for a variety of uses, such as an unexpected housing cost, fast-cash payday loans, auto loans, credit cards, and financing for a variety of additional needs.

Many of these loans are often combined with extremely high interest rates along with exorbitant fees and add-on costs, most of which may be a direct violation of the Servicemembers Civil Relief Act, 50 USC App. § 501 – 596 (SCRA).

What to Do:

  • Familiarize yourself with your legal rights under both state and federal law.
     
  • Contact your branch of the military to see what financial assistance and education programs are available to you.
     
  • Always work with known businesses, specifically those that cater to military families and personnel.
     
  • Check out the business or charity with your local Better Business Bureau through the BBB Military Line.


Know your Rights:

  • Active duty members are provided certain protections aimed at postponing or suspending certain obligations, in order to allow members to focus their full attention on their military duties, without a negative effect for themselves or their families.  Much of these protection are provided through laws such as the Servicemembers Civil Relief Act (SCRA).

Mortgage and Credit Card Protection:

  • The SCRA limits the interest rate that may be charges on mortgages and credit cards held by a service member or joint spouse during a period of active duty service to a rate of no more than 6%
     
  • Lenders must allow a limited grace period and may not foreclose on a property for failure to pay a mortgage debt while a member is on active duty without prior approval from the court

Payday loans, tax refund anticipation loans, and car title loans:

  • Members are also provided a 36% annual interest rate cap, which includes most fees (excluding late and default charges) and insurance premiums, with no repayment fees due to the Military Annual Percentage Rate (MAPR).  This includes a ban on secured loans by using a personal check or bank account, vehicle title, or military allotments.


Need more information?

To learn more about your specific rights and how they may apply to your particular situation, you may wish to contact your nearest Armed Forces Legal Assistance Program or the Consumer Financial Protection Bureau (CFPB), by calling 1-855-411-2372.   

If you believe you have been victimized by a predatory lender or wish to report suspicious activity, please file a report here.

 

 

 

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