Military Lending Act regulation
32 CFR 232.7: The MLA and State Lending Laws (Preemption)
Official heading: § 232.7 Preemption.
In one line
Says the MLA and its rule override inconsistent state or federal law, except where another law protects covered borrowers more, and bars states from treating members and dependents worse than residents.
- A stricter state rate cap or protection still applies on top of the MLA
- States may not let creditors charge covered borrowers more than the legal limit for residents
- States may not waive their lending protections because a borrower is a nonresident or in the military
Text checked October 10, 2026
What 32 CFR 232.7 does to your money
The MLA sets a floor, not a ceiling. The Act and this rule preempt state or federal laws, state usury laws included, only to the extent they are inconsistent with the MLA. A law that gives a covered borrower more protection is not preempted. If your state caps a payday or installment loan below 36%, the lower state cap applies to you.
Paragraph (b) addresses a specific abuse. A state may not authorize creditors to charge covered borrowers a higher rate than the legal limit for its residents, and it may not allow its consumer lending protections to be violated or waived because a borrower is a nonresident or in the military, whatever the borrower’s domicile or home of record. A servicemember stationed in a state but domiciled elsewhere keeps that state’s lending protections where they would otherwise apply.
This is the section to cite when a lender argues that your home-of-record state’s law, or your military status, puts you outside a state protection. It works alongside the SCRA, whose protections the MLA rule expressly leaves in place (§ 232.11), so a pre-service loan can carry the SCRA’s 6% cap while new credit carries the MLA’s 36% ceiling.
The full text of 32 CFR 232.7
From the eCFR, current through October 7, 2026; this section was last amended December 5, 2016 (official source, retrieved October 10, 2026). House style: em dashes in the official text are shown as colons or periods; no word is changed.
(a) Inconsistent laws. 10 U.S.C. 987 as implemented by this part preempts any State or Federal law, rule or regulation, including any State usury law, to the extent such law, rule or regulation is inconsistent with this part, except that any such law, rule or regulation is not preempted by this part to the extent that it provides protection to a covered borrower greater than those protections provided by 10 U.S.C. 987 and this part.
(b) Different treatment under State law of covered borrowers is prohibited. A State may not:
(1) Authorize creditors to charge covered borrowers rates of interest for any consumer credit or loans that are higher than the legal limit for residents of the State, or
(2) Permit the violation or waiver of any State consumer lending protection covering consumer credit that is for the benefit of residents of the State on the basis of the covered borrower's nonresident or military status, regardless of the covered borrower's domicile or permanent home of record, provided that the protection would otherwise apply to the covered borrower.
Every MLA guide on this site is on the Military Lending Act hub; the SCRA, which covers debt from before active duty, is on its own section-by-section index.
Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.