WASHINGTON — The Department of Defense has released its final regulation capping interest rates–and creating a new Military APR–at 36% on payday loans, vehicle title loans, and tax refund anticipation loans.
The final rule was issued with little change from the proposal, which had the input of all the financial regulatory agencies including NCUA. "NCUA was pleased to have input to this important rulemaking process, particularly since it represents a step in the right direction to eradicated predatory lending practices aimed at our servicemembers," NCUA Director of Public and Congressional Affairs John McKechnie said. "Chairman Johnson took a high degree of interest in the legislative process last year and was similarly involved during the regulatory phase."
Noting initial industry concerns that the DoD could craft an overly broad regulation, CUNA Deputy General Counsel and Senior Vice President of Regulatory Advocacy Mary Dunn said, "All things considered, the rule is very fair and well constructed."
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NAFCU President/CEO Fred Becker highlighted the narrow focus of the new rule, effective Oct. 1. "The final regulation provides consumer protection while balancing the need to provide military families with the financial services they require," he said.
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