SCRA and MLA: How Military Borrowers Get Lower Personal Loan APRs
SCRA caps pre-service loan interest at 6%. MLA limits new active-duty credit to 36% MAPR. Learn how military borrowers claim these rate protections.
Two federal laws give active-duty servicemembers some of the strongest interest-rate protections available to any borrower in the United States. Yet the CFPB's research consistently finds that many eligible servicemembers either do not know the protections exist or do not request them from their lenders. If you are on active duty — or have a pre-service loan and recently received orders — this is worth reading carefully.
The Two Laws: SCRA and MLA
The Servicemembers Civil Relief Act (SCRA) applies to debt you took out before entering active-duty military service. Once you are on active duty, you can request that the interest rate on those pre-service loans be reduced to a maximum of 6% per year — including mortgages, auto loans, credit cards, and personal loans. The reduction applies for the duration of active-duty service.
The Military Lending Act (MLA) applies to new consumer credit taken out while on active duty. It sets a ceiling of 36% Military Annual Percentage Rate (MAPR) on covered credit products. The MAPR calculation is broader than a standard APR — it includes not just interest but also application fees, credit insurance premiums, and other add-on charges lenders sometimes use to obscure the true cost of borrowing. Importantly, the MLA covers active-duty servicemembers, their spouses, and covered dependents.
How These Caps Compare to Typical Consumer APRs
The chart illustrates why SCRA matters most for borrowers who took out loans at higher rates before enlisting. A personal loan originated at 23% APR for someone with fair credit drops to 6% the moment they go on active duty — a reduction that can save hundreds of dollars over the remaining life of the loan.
The MLA cap is a ceiling, not a target rate. Lenders can offer lower rates, and many do for borrowers with strong credit profiles. The cap functions as a backstop against predatory products — payday loans, certain auto title loans, and refund anticipation products that might otherwise carry APRs far above 36%.
How to Claim Your SCRA Rate Reduction
Lenders are required to honor SCRA protections, but in most cases you must formally request them. To reduce the interest rate on a pre-service loan:
- Send the lender a written request by certified mail (or via their secure messaging system if they offer one).
- Include a copy of your military orders showing your active-duty start date.
- Send the request no later than 180 days after your military service ends — the protection can be claimed retroactively within that window if you missed it while deployed.
The lender must then reduce the interest rate to no more than 6% and forgive (not defer) any interest above that cap for covered periods. The forgiven interest is not added back to the balance when your service ends.
The U.S. Department of Justice's Servicemembers and Veterans Initiative enforces SCRA violations. You can file a complaint at justice.gov if a lender refuses a valid SCRA request.
MLA Protections: What Lenders Must and Cannot Do
For new credit taken out while on active duty, the MLA prohibits lenders from:
- Charging a MAPR above 36%
- Requiring you to waive your rights under the MLA or SCRA as a condition of the loan
- Using mandatory arbitration clauses
- Requiring you to establish an allotment to repay the loan
Lenders are also required to give you certain disclosures before you sign — including a statement of your MLA rights and the MAPR calculated on your specific loan. If a lender fails to provide these, the loan agreement can be void.
Before applying for any new personal loan while on active duty, verify that the lender has checked the Department of Defense's MLA database to confirm your covered status. Most major consumer lenders do this automatically, but it is worth confirming.
Refinancing Into a Lower Rate After SCRA Ends
SCRA protection on a pre-service loan ends when active-duty service ends. At that point, the original interest rate can legally resume. If your credit profile has strengthened during your service — and it often does if you have been managing debt responsibly — refinancing into a new personal loan at a market rate after your service ends can lock in a lower long-term rate.
For context on whether refinancing makes sense for your specific balance and remaining term, see our guide on when refinancing a personal loan saves money.
The rate-shopping process for veterans is the same as for any consumer: prequalify with multiple lenders to see what rates you are offered before submitting a full application. Our guide to rate shopping without hurting your credit walks through how to do that efficiently.
A Note on VA Loans and Other Veteran Benefits
SCRA and MLA are separate from VA home loan benefits, which are administered by the Department of Veterans Affairs and apply to mortgages, not personal loans. The VA also has a financial counseling program — the VA Financial Counseling Service — that can help veterans navigate debt repayment options at no cost.
For the personal loan market specifically, the protections described in this post are your primary tools. Use them.
What to Do Next
If you are on active duty and have pre-service debt, send SCRA reduction requests to your lenders with your military orders. If you are shopping for new personal credit while on active duty, confirm your MLA-covered status before signing anything, and verify that the MAPR is at or below 36%. If your service is ending and you have high-rate debt, rate shopping for a refinance can lock in improvements to your credit profile before rates reset.
See what personal loan rates are currently available for your situation at /get-started — comparing prequalified offers does not affect your credit score.