MLA vs SCRA: Understanding Military Protections

Serving in the armed forces often means stepping away from everyday life to answer a bigger call. During that time, financial and legal responsibilities do not pause, which is why laws exist to protect you and your family. Two of the most important are the Servicemembers Civil Relief Act and the Military Lending Act.

Both were designed to ease the weight of financial obligations during active duty, but they are not the same. Each law covers different ground, which can make it hard to tell them apart.

This guide will clear up the confusion and show you how each protection works. Let’s start by breaking them down in simple terms so you know exactly what applies to you.

What Is the Servicemembers Civil Relief Act (SCRA)?

The Servicemembers Civil Relief Act is a federal law that protects you from certain financial and legal pressures once you enter active duty. First passed in 1940 and later updated after September 11, the SCRA is now codified under 50 U.S.C. § 3901–4043.

Its purpose is simple: reduce the stress of personal obligations so you can focus on military service.

The law applies mainly to debts and agreements made before active duty. That means if you signed a lease, opened a credit card account, or took out mortgage loans before joining active service, SCRA protections may apply.

Some of the key benefits include:

• Interest rate relief: Debts such as mortgage loans, credit card accounts, or installment loans can be reduced to a six percent interest rate while you serve.
• Housing protections: You can terminate a residential or motor vehicle lease if active duty orders prevent you from keeping it. Eviction protections also apply if you or your dependents cannot cover the monthly rent.
• Protection from repossession and foreclosure: Lenders cannot repossess vehicles or foreclose on homes without a court order, giving you more stability while deployed.
• Court safeguards: Default judgments and other civil actions may be delayed if military service materially affects your ability to appear.

To activate these protections, you typically need to submit written notice and proof of active duty status to your creditor, landlord, or mortgage servicer. Once that documentation is in place, financial institutions must comply with the law.

What Is the Military Lending Act (MLA)?

High-cost loans have long been a problem for military families, often leaving service members paying far more than they borrowed. To put an end to these predatory practices, Congress passed the Military Lending Act in 2006.

The law was built to give active duty service members and their dependents stronger financial safeguards when taking out new credit.

While the Servicemembers Civil Relief Act applies to debts made before entering service, the MLA steps in for consumer credit extended during active duty. Its protections automatically apply when a new loan or credit product is issued.

The law specifically targets products that have historically carried abusive terms, including:

• Payday loans
• Vehicle title loans
• Credit card accounts
• Refund anticipation loans

A central feature of the MLA is the 36 percent Military Annual Percentage Rate cap. Unlike the standard APR shown to civilians, the MAPR calculation includes interest, credit insurance premiums, application fees, and most other charges tied to the loan. This prevents lenders from hiding costs behind extra fees.

The law also bans harmful loan features. Lenders cannot add mandatory arbitration clauses, enforce unreasonable rollovers, or penalize you for paying off debt early. These protections give service members a fairer chance to borrow responsibly without being trapped by unfair terms.

Major Differences Between SCRA and MLA

1. Applicability Timeline: Before vs. During Active Duty

One of the clearest distinctions between the Servicemembers Civil Relief Act and the Military Lending Act lies in when protections take effect.

The SCRA applies to debts and obligations that existed before entering active duty. If you financed a vehicle or signed a lease before receiving active duty orders, this law can help ease those financial obligations while you serve. For instance, a car loan signed six months before basic training could qualify for an interest rate reduction under the Civil Relief Act.

The MLA works on the opposite end of the timeline. Its protections focus on consumer credit extended during active duty. This means any new loans or credit products opened after you begin service must comply with the Military Lending Act.

A common example would be applying for a credit card account while deployed. In that situation, the 36 percent MAPR cap and other MLA protections automatically apply, shielding you from abusive terms.

2. Type of Protections Offered

The Servicemembers Civil Relief Act focuses on both financial and legal rights for active duty service members. Some of the most valuable protections include:

• Reduced interest rates: Existing debts such as mortgage loans, vehicle loans, or credit card accounts can be lowered to six percent while you serve.
• Housing security: Eviction protection and the ability to terminate leases when military orders require relocation.
• Court protections: Civil actions like foreclosure, repossession of personal property, or default judgments may be delayed if active duty materially affects your ability to respond.

Consider a real-life scenario: a National Guard member called to active duty receives a foreclosure notice. Under the Civil Relief Act, the court can issue a stay, preventing the immediate loss of the home.

The Military Lending Act takes a different approach. It is centered on consumer credit products extended during active duty, such as payday loans, vehicle title loans, and refund anticipation loans. Key protections include:

• 36 percent Military Annual Percentage Rate cap that covers interest, credit insurance premiums, application fees, and other charges.
• Banned loan features such as mandatory arbitration clauses, unreasonable rollovers, and prepayment penalties.
• Lender responsibility: Financial institutions must check your active duty status before approving new credit.

For example, a payday loan offered at 200 percent APR would be void under MLA compliance. The MAPR calculation ensures service members and covered dependents never face such predatory terms.

3. Interest Rate Cap Differences

The Servicemembers Civil Relief Act sets a strict limit of six percent on debts incurred before active duty. This rule applies to obligations such as mortgage loans, installment loans, or credit card accounts. Any interest charged above that rate must be forgiven entirely, ensuring service members are not burdened by pre-service financial agreements.

The Military Lending Act takes a different approach. It establishes a 36 percent Military Annual Percentage Rate cap on new consumer credit extended during active duty. Unlike a civilian APR, the MAPR includes not just finance charges but also application fees, credit insurance premiums, and participation fees.

This distinction answers a common question: What is the MAPR cap for MLA? It is 36 percent, a safeguard that keeps products like payday loans or vehicle title loans from reaching the 200 percent rates often seen in the civilian market. The MLA protects active duty service members and their covered dependents from falling into high-cost debt by cutting off those excessive charges.

4. Who Is Covered?

The scope of coverage under each law is another area where the Servicemembers Civil Relief Act and the Military Lending Act part ways.

The Servicemembers Civil Relief Act extends broadly across the armed forces. It applies to active duty service members, reservists called to federal service, and National Guard members serving under Title 10 orders. Coverage also reaches officers serving in the Public Health Service and the National Oceanic and Atmospheric Administration.

In some cases, dependents may also benefit, particularly when financial obligations like monthly rent or mortgage loans materially affect the family during active duty.

The Military Lending Act is narrower in who it covers. It applies to active duty service members and their covered dependents as defined by federal law. Covered dependents usually include a spouse and children, but not every family member qualifies.

For example, the MLA does not generally extend protections to National Guard members on state orders or to dependents outside the official definition, such as extended family.

5. Types of Loans and Obligations Covered

The Servicemembers Civil Relief Act and the Military Lending Act both protect service members, but they do so across very different types of financial obligations.

The Servicemembers Civil Relief Act focuses on debts and contracts signed before entering active duty. This can include:

• Mortgage loans and home equity loans
• Auto loans or motor vehicle financing
• Student loans
• Personal loans and installment loans
• Tax obligations
• Small business debts

For example, if you signed a student loan agreement before basic training, the SCRA interest rate reduction to six percent would apply during active duty. The same rule would hold for a business loan you took out before being called to service.

The Military Lending Act is designed for credit extended while on active duty. It specifically regulates high-cost consumer credit products such as:

• Payday loans
• Vehicle title loans
• Credit card accounts
• Refund anticipation loans
• Certain installment loans and deposit advance products

A side-by-side comparison makes the distinction clear:

SCRA (pre-service debts)	MLA (during active duty credit)
Mortgages and home equity loans	Payday loans
Auto loans	Vehicle title loans
Student loans	Credit card accounts
Personal loans	Refund anticipation loans
Tax obligations	Certain installment loans
Small business debts	Deposit advance products

6. Lease and Housing Protections

Housing and lease obligations are another area where the Servicemembers Civil Relief Act and the Military Lending Act differ sharply.

The Servicemembers Civil Relief Act provides strong housing protections that go beyond financial relief.

If you receive military orders that require a permanent change of station or deployment lasting more than 90 days, you have the right to terminate a residential lease without penalty. This rule also applies to motor vehicle leases and, in some cases, business property leases.

Eviction protections are another safeguard: landlords cannot evict you or your dependents for nonpayment of monthly rent if active duty materially affects your ability to meet that obligation. These provisions are especially important for families who must adjust quickly to military operations or new assignments.

By contrast, the Military Lending Act does not cover housing or leases. Its scope is limited to consumer credit products, meaning protections for rent or lease agreements fall entirely under the civil relief act.

7. Enforcement and Compliance

The Servicemembers Civil Relief Act is overseen by the Department of Justice. When lenders or landlords ignore the law, the DOJ can step in with lawsuits that may lead to fines, restitution, or court orders stopping unlawful actions. Notable cases have involved mortgage servicers who failed to apply the six percent interest rate cap or repossessed vehicles from service members despite valid active duty orders.

The Military Lending Act is monitored by several agencies, including the Consumer Financial Protection Bureau and the Department of Defense. Borrowers themselves can also bring private actions. Penalties for noncompliance are steep: a loan can be voided entirely, lenders may be ordered to return funds, and companies risk long-term reputational harm.

Payday lenders, for example, have faced legal action for charging rates far above the 36 percent Military Annual Percentage Rate cap or failing to confirm active duty status before issuing credit.

Key Differences Between SCRA and MLA

A side-by-side view makes it easier to see how the Servicemembers Civil Relief Act and the Military Lending Act differ in scope, timing, and protections.

Aspect	SCRA	MLA
Interest Cap	Limits qualified pre-service debts to 6 percent annually, with excess interest forgiven.	Caps Military Annual Percentage Rate at 36 percent, covering interest, fees, credit insurance premiums, and most charges.
Applies To	Obligations and contracts made before entering active duty.	New consumer credit products issued during active duty.
Protections	Legal and financial: interest reduction, lease termination, eviction protection, foreclosure and repossession stays, default judgment safeguards.	Credit-specific: cost limits, banned loan features, mandatory lender disclosures, MAPR calculation.
Covers	Mortgages, auto loans, student loans, personal loans, tax obligations, and small business debts.	Payday loans, vehicle title loans, credit card accounts, refund anticipation loans, and certain installment loans.
Who Is Covered	Active duty service members, reservists on federal orders, National Guard on Title 10 orders, NOAA and PHS officers, and sometimes dependents.	Active duty service members and covered dependents as defined by law (spouses and children).
Enforcement	Department of Justice can bring lawsuits, secure fines, and order restitution.	Enforced by CFPB, DoD, and private actions; noncompliant loans may be void, and lenders face steep penalties.

How SCRA and MLA Work Together?

Financial protection for service members is not handled by one law alone. The Servicemembers Civil Relief Act addresses debts and contracts taken on before active duty, while the Military Lending Act controls the terms of new credit issued during service.

Together, they cover both sides of a service member’s financial life.

Both laws share the same goal: keeping you focused on your duty while supporting your family’s security and financial well-being. The SCRA lowers interest rates and eases past obligations, while the MLA prevents predatory credit practices that could drain future income.

To make the most of these protections, service members should:

• Notify lenders in writing and provide proof of active duty status when requesting SCRA benefits.
• Check that new loans or credit agreements comply with MLA rules before signing.
• Use resources such as military legal assistance offices or SCRACVS verification services to confirm eligibility and stay compliant.

Working together, these laws give you a safety net that reduces past burdens and blocks unfair costs going forward.

Protect Your Rights With Confidence

Serving in the armed forces means taking on responsibilities that few others experience, but it should not mean carrying the weight of unfair debts or risky credit terms. Federal protections like the Servicemembers Civil Relief Act and the Military Lending Act exist to make sure you and your family are not left vulnerable while you serve.

Knowing how these laws apply can save money, prevent abusive lending, and strengthen your financial security. They are not favors or handouts; they are rights you have earned through your service. Whether it is lowering interest on a mortgage loan, avoiding predatory payday loans, or keeping your household stable during deployment, these protections are designed to give you peace of mind.

If you need to prove active duty status or provide documentation to a lender, SCRACVS can help. Take the first step toward safeguarding your rights. Begin your verification today.

Frequently Asked Questions (FAQs)

What types of loans are covered under the Military Lending Act?

The Military Lending Act applies to high-cost consumer credit products extended during active duty service. This includes payday loans, vehicle title loans, refund anticipation loans, installment loans, deposit advance products, and most credit card accounts. The law requires financial institutions to check your active duty status before approving credit and ensures MLA compliance by capping the Military Annual Percentage Rate at 36 percent. Mortgages, home equity loans, and small business debts are not included in MLA protections, which is why it is often paired with the Servicemembers Civil Relief Act for broader coverage.

Does SCRA apply to personal loans?

Yes, the Servicemembers Civil Relief Act applies to personal loans if they were taken out before entering active duty. Once you provide written notice and proof of military service, the creditor must reduce the interest rate to six percent for the duration of your service. This benefit also extends to other pre-service obligations like mortgage loans, auto loans, and credit card accounts. Any interest above the six percent limit is forgiven, giving active duty service members meaningful relief on financial obligations that might otherwise strain household budgets.

Does SCRA apply to business loans?

The SCRA can apply to certain business debts if the obligation was incurred before entering active duty and if the servicemember is personally liable for repayment. For example, a small business loan signed in your name prior to deployment may qualify for the six percent interest rate cap and other protections under the civil relief act. However, if the business debt is tied only to a corporation or partnership where the servicemember has no personal liability, then coverage may not apply. It is important to review loan terms carefully and consult military legal assistance for clarity.

What consumer type loan is exempt from MLA?

The MLA is designed to regulate short-term and high-cost consumer credit, but it does not cover every loan. Mortgages, home equity loans, and secured real estate loans are exempt. Business loans are also excluded because MLA protections focus on personal consumer credit transactions, not commercial lending. This is why questions about “Does MLA apply to business loans?” often arise. Service members should note that the MLA mainly covers payday loans, credit card accounts, and vehicle title loans taken out during active duty, leaving larger obligations to be governed by other federal laws.

What is the MAPR cap under the MLA?

The Military Lending Act sets the Military Annual Percentage Rate at 36 percent. The MAPR calculation is more comprehensive than a civilian APR because it includes not just interest but also credit insurance premiums, application fees, participation fees, and many service charges associated with a credit transaction. This cap prevents lenders from disguising the real cost of borrowing with hidden charges. For example, a payday loan marketed at a 200 percent APR would be void under MLA protections, giving service members and covered dependents a safeguard against predatory lending practices.

Does MLA apply to new loans or refinances?

The MLA applies to new consumer credit extended while the borrower is on active duty. This includes credit card accounts, installment loans, or refund anticipation loans. A refinance, however, may not always fall under MLA protections if the original loan was signed before entering service. For example, refinancing a pre-service auto loan would not fall under MLA but may qualify for SCRA protections instead. Service members should always confirm with lenders whether a credit transaction falls under MLA compliance before agreeing to new terms.

When does the MLA apply to loans originated by active-duty servicemembers?

The Military Lending Act applies the moment an active duty servicemember or covered dependent enters into a new credit transaction. Financial institutions are required to verify the borrower’s active duty status through databases before finalizing the loan. If a lender fails to confirm this and issues credit outside of MLA protections, the loan can be considered void. This ensures that service members signing up for consumer credit products like installment loans, payday loans, or credit card accounts during active duty are automatically safeguarded under federal laws.

What is the deadline to request SCRA interest rate reduction?

To receive interest rate relief under the civil relief act, you must provide written notice and proof of active duty status to your creditor. The law allows up to 180 days after leaving active service to submit this request. Once the notice is received, creditors must retroactively adjust the interest rate to six percent for the entire period of active duty. For example, if you were paying 12 percent on a mortgage loan, the excess six percent would be forgiven for the time you served, not simply deferred to a later date.

Do military members automatically get lower interest rates?

No, reduced interest rates under the Servicemembers Civil Relief Act are not automatic. You need to notify your lender in writing and provide proof of active duty orders for the six percent rate to apply. Without this step, financial institutions are not required to make adjustments. By contrast, the Military Lending Act protections are automatic at the point of credit origination, since lenders must verify active duty status before issuing consumer credit. Knowing the difference can help service members take advantage of both sets of protections at the right time.

What protections expire after discharge?

Most SCRA protections end once you leave active duty, though certain provisions extend for a limited time. For example, the six percent interest rate cap on pre-service debts can continue for up to one year after discharge on mortgage loans. Other protections, such as eviction stays or protection from default judgments, generally end when active duty status concludes. The MLA is more straightforward: it only applies while you are on active duty and to loans taken out during that time. Once service ends, MLA protections no longer apply to new credit transactions.