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Senators turn to Pentagon to guard Servicemembers by Plugging Payday Loan Loophole

WASHINGTON, DC – in order to protect soldiers and their loved ones from abusive economic methods, a team of 23 U.S. Senators, led by Jack Reed (D-RI), Dick Durbin (D-IL), and Mark Udall (D-CO), is urging Department of Defense (DOD) Secretary Chuck Hagel to shut a loophole that enables loan providers to restructure their old-fashioned loans in order to prevent a DOD rule restricting the actual quantity of interest on credit items offered to servicemembers.

The Military Lending Act – enacted in 2007 – capped the yearly interest levels for credit rating to servicemembers at 36% while offering DOD the authority to define exactly just exactly what loans must certanly be covered. The DOD’s last guideline included just old-fashioned pay day loans not as much as 3 months and vehicle title loans significantly less than 180 times, but excluded overdraft loans, installment loans, non-traditional pay day loans and non-traditional vehicle name loans. DOD happens to be reviewing this guideline to ascertain whether or otherwise not it ought to be broadened to add various types of credit.