Military Payday Loans – How Do They Work

We hear from active duty military personal all the time, and many ask why it’s so difficult for them to find a payday loan. It’s nearly impossible to find a reputable direct payday lender that offers loans to people in the military. The reason for this is that most active duty members of the military are restricted from getting loans because of specific state and federal lending restrictions.

Can military members get direct payday loans?

Most customers do not know the laws affecting their chances of getting a cash advance. Even if you live in a state with many direct lenders, you won’t get too far because of the Military Lending Act. This Act states that payday and car title loan companies can not charge an interest rate on a traditional direct payday loan of more than 36% to active duty military members. In theory, this would be just fine. Even 36% sounds higher for someone with bad credit than applying for a traditional bank loan or online car loan.

Almost every reputable direct payday lender ceased offering loans to consumers and spouses in the armed forces when these regulations were enacted. The reasoning was that anyone looking for a direct payday lender has pretty much tapped out the typical ways of getting a loan. They say a cash advance is intended to be a short term emergency option for fast cash. There would be no way to make money on a loan if the rate is capped at 36%. That’s when you factor in overhead and loan defaults at current rates. These defaults are common in the payday loan and car title lending industry.

It’s difficult to find payday loans for anyone in the military

These regulations went into effect years ago to halt high interest loans issued to those in the military who took out payday loans and cash advances. On the surface, they’ve done what they intended, as most direct payday lenders now have strict policies limiting loans to those in the military. That is, push large lenders out of offering loans to military members. Currently, no trusted companies in our list of direct tribal lenders provide this form of financing. As with government restrictions, these laws have created loopholes and other problems. Some companies that offer online payday loans seek to take advantage of the situation.

Some small cash advance companies are now offering car title and installment loans. They claim these are not subject to the Military Lending Act. These lenders claim they’re exempt if they offer online loans for more than 91 days and more than $2,000. Based on these loopholes, these companies have skirted the Military Lending Act for years, but it looks like that will change soon. As of last year, the Department of Defense was actively considering changing the Lending Act. Prospective changes would close these loopholes and create new restrictions. The goal is to make it even harder for any company to offer a direct payday loan in FL to someone on active duty.

You won’t be approved for military payday loans if you’re on active duty!

It will be interesting to see how these proposed changes to military payday loans play out as we move towards 2025. Reputable payday loan companies will stay on the sidelines as long as interest rates can’t exceed 36% and licensed lenders don’t want to cause any problems with the Government and risk fines or other legal action. While that may seem good to some people, it also shuts the door on many consumers who need a short-term cash advance. Essentially, there are no options for someone in the military dealing with a sudden financial emergency.

Direct payday and tribal loans with no credit check have always gotten a bad rap. But when used correctly, they can serve a purpose. Unless something changes, we cannot recommend them to our visitor who emailed us.