New
Restrictions on Military Payday Loans
October
1, 2007
Effective Oct. 1, 2007, the Department of Defense final
regulation of the Talent-Nelson amendment has imposed
restrictions on certain types of consumer lending. The
final regulation focused on predatory products, such as
payday loans, car title loans, and tax refund anticipation
loans. The most significant restriction was a 36% APR cap
on loans to service members and their dependents.
This new restriction is expected to severely limit payday
lenders from continuing to do business with service
members and their families.
Observers anticipate that payday loan companies will not
be able to offer new loans or refinance current loans.
This new regulation is applicable to on-line payday loan
companies as well.
So
what does this mean for service members that currently
have a payday loan? He/she will likely need to pay off
the loan in full on the due date (usually two weeks after
inception) or risk the payday company reporting the
delinquent payment to the credit bureau.
It's likely that some service members will turn to the
Internet in search of traditional (installment) military
loans. Others may seek loans from military base assistance
programs and from banks and credit unions.
The
new restrictions will likely doom 'brick-and-mortar'
payday loan lenders located outside the gates of many
US Military bases. Locations of military payday lenders
likely taking the hit include Quantico, Fayetteville (Fort
Bragg), Norfolk (Naval Station), El Paso (Fort Bliss),
Colorado Springs, San Diego (Naval Station, Camp
Pendleton, etc.), Honolulu/Hawaii (Schofield Barracks,
etc.), San Antonio (Lackland, Randolph, etc.), and Killeen
(Fort Hood).
(Pioneer Military Loans, currently offered through MilitarySpot.com, are not affected by the new restrictions
as Pioneer Services has always adhered to these
restrictions. If you are a current or former military
payday loan user and are in need of a personal cash loan
then we invite you to apply for a Pioneer Military Loan.)
About Pioneer
As
one of the leading military financial services company
with more than 20 years experience offering responsible
alternatives to predatory lending, Pioneer Services
understands that military families are traditionally
underserved by banks and credit unions when they are in
need of money. Pioneer offers responsible installment loans
that are backed by a 15 day guarantee of satisfaction.
Loan decisions are made in a matter of hours, not days or
weeks.
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