MLA Covered Credit: What Loans the 36% Cap Reaches
Part of: The Complete Guide to the SCRA
The 36% MAPR ceiling only means something if your loan is the kind the Military Lending Act covers. Before you argue a rate, settle the coverage question. It has a clean statutory answer.
What “consumer credit” means here
Under 32 CFR § 232.3(f), consumer credit under the MLA is credit offered or extended to a covered borrower primarily for personal, family, or household purposes that is either subject to a finance charge, or payable by written agreement in more than four installments. The 2015 rule aligned this with the Truth in Lending Act’s definition, which is why MLA coverage today is broad rather than product-by-product.
Practically, that pulls in the whole family of products lenders aim at troops:
| Product | Covered by MLA? |
|---|---|
| Payday loan | ✓ Covered |
| Vehicle-title loan (cash-out against a car you own) | ✓ Covered |
| Tax-refund-anticipation loan | ✓ Covered |
| Deposit-advance product | ✓ Covered |
| Unsecured installment / personal loan | ✓ Covered |
| Credit card (since Oct 3, 2017) | ✓ Covered |
| Most open-end consumer credit lines | ✓ Covered |
| Residential mortgage | ✕ Excluded |
| Loan to buy a car, secured by that car | ✕ Excluded |
| Loan to buy goods, secured by those goods | ✕ Excluded |
The three exclusions, and why they exist
Section 232.3(f) carves out three categories. Each one is purchase-money financing of the very thing that secures the loan.
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Residential mortgages. Any credit transaction secured by an interest in a dwelling. Mortgages are governed by their own dense body of federal law, and the SCRA separately protects your home through its foreclosure shield and the mortgage rate cap.
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Purchase-money vehicle loans. A credit transaction expressly intended to finance the purchase of a motor vehicle when the credit is secured by the vehicle being purchased. Buying a car and financing it with a loan secured by that car is outside the MLA.
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Purchase-money loans for personal property. A credit transaction expressly intended to finance the purchase of personal property when the credit is secured by the property being purchased. Financing a laptop or furniture with a loan secured by that item is outside the MLA.
The logic is consistent: Congress targeted the stand-alone predatory credit products, not ordinary secured purchase financing where you get an asset for the debt. Note the sharp edge on the vehicle exclusion. Buying a car with a secured purchase loan is excluded. Pledging a car you already own to a title lender for cash is a vehicle-title loan, which is covered. The presence or absence of a purchase is what flips it.
A related trap: if a lender bundles extra cash or add-on products into what looks like a purchase-money car loan, regulators have warned that the loan can lose the exclusion and fall back under the MLA. The exclusion is for financing the vehicle, not for using a car purchase as a wrapper for other credit.
How this connects to the SCRA
Coverage under the MLA is about the product and the timing of origination. The SCRA’s 6% cap is about the timing of the debt relative to your service, and it reaches nearly any pre-service debt type, including mortgages and car loans the MLA excludes. So the same asset can be protected by different laws at different moments. A pre-service payday loan is an SCRA 6% question; the same storefront’s during-service payday loan is an MLA 36% question. The payday and title loan guide walks that split, and MLA vs SCRA lays the two caps side by side.
What this coverage is not
The MLA is not a mortgage law. If a lender or a form tells you the MLA caps your home loan, that is wrong. Residential mortgages are excluded by § 232.3(f). Your mortgage protections come from the SCRA and other statutes, not from the 36% MAPR cap.
The MLA does not cover the car loan you used to buy the car. Do not aim a 36% MAPR argument at purchase-money auto financing secured by the vehicle. It is excluded. A title loan against a car you already own is a different animal and is covered.
The MLA is not limited to storefront lenders. Because coverage tracks the TILA definition of consumer credit, a covered installment loan or credit card from a bank, a fintech, or an online lender is inside the MLA just as much as a payday storefront is.
Settle the coverage question first
- Name the product honestly: payday, title, tax-refund advance, deposit advance, installment, credit card, or a purchase-money loan.
- Check for the three exclusions. Is it a residential mortgage, a loan to buy the car that secures it, or a loan to buy the goods that secure it? If yes, the MLA does not apply.
- On a car deal, ask the key question: is this financing the purchase of the car (excluded) or a cash loan against a car you already own (covered)?
- If it is covered consumer credit, the 36% MAPR cap and the banned-terms list apply. Move on to reading the MAPR.
- If it is a pre-service debt of any kind, switch laws: look at the SCRA 6% cap instead.
The law behind this: 32 C.F.R. § 232.3
Definition of consumer credit under the MLA and its exclusions for mortgages and purchase-money loans — read the statute.
Frequently asked questions
Does the Military Lending Act cover my car loan?
Usually no. Under 32 CFR § 232.3(f), a credit transaction that is expressly intended to finance the purchase of a motor vehicle and is secured by that vehicle is excluded from the MLA, the same as a mortgage. A cash-out title loan against a car you already own is different: that is a vehicle-title loan, which the MLA squarely covers. The exclusion is only for purchase-money financing of the car itself.
Are credit cards covered by the MLA?
Yes. The 2015 expanded rule brought open-end credit, including credit cards, under the MLA, with compliance required for credit cards starting October 3, 2017. That means the 36% MAPR ceiling and the banned-terms list apply to a credit card opened by a covered borrower, though the rule allows a card issuer to exclude certain bona fide, reasonable fees from the MAPR under § 232.4(d).
What makes something "consumer credit" under the MLA?
Under 32 CFR § 232.3(f), consumer credit is credit offered to a covered borrower primarily for personal, family, or household purposes that is either subject to a finance charge or payable by written agreement in more than four installments. Business credit is not consumer credit, and neither is credit that carries no finance charge and is payable in four or fewer installments.
Sources
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.