Why Military Members Are Ineligible for Payday Loans

You may have noticed that the vast majority of payday loan websites state that members of the U.S. military, and their immediate families, are ineligible for payday loans. The reason has nothing to do with how individual lenders view our military. Instead, current law actually places significant restrictions on how lenders are able to serve military personnel.

Concentrations of lenders with retail storefronts in areas surrounding military bases spurred accusations that lenders were targeting low-paid military personnel. As a response, the 2007 Defense Authorization Act placed numerous restrictions on loans available to those in the military. Lenders may not charge more than 36% interest (including all fees), nor are they allowed to secure a loan with a military applicant’s auto title, or to use a military applicant’s check to access a checking account for security.

In the past, the military has had to revoke security clearances from personnel with significant financial difficulties. The fear has been that personnel with financial problems could be targets for those who would seek access to classified information. In some cases, the military will impose its own penalties on personnel whose finances become a security concern, in addition to the penalties reserved for lenders who violate the current law.

Though MyCashNow would like to be able to help military families, just as we help civilian families when they need cash, current law prevents it. Some will view these restrictions as proper, while others will see them as an obstacle to those who are unable to qualify for traditional loans. Either way, we felt it important to explain this portion of MyCashNow policy.