Just like in other conventional loans, military cash loans are bound by terms and conditions. In other words, there are things that are allowed or not allowed in a loan transaction. Before you sign up for any military loan, here are some pointers as to what you should expect.
Military Cash Loan Coverage
First and foremost, these loans exclusively cover individuals who are serving in the US military. Being an active member of the Army, Navy, Marine Corps, Coast Guard, Air Force, or the National Guard makes you eligible to take out military loans.
In most cases, your valid military ID is all you need to apply for loans. Still, some military loan programs will require proof of your active status in any branch of the US armed forces. Some military cash loans may be available to veterans. For such loans, an applicant must present proof that he or she was not dishonorably discharged from the service.
The cash loans offered to men and women in uniform can be used for anything. As the borrower, you have the choice as to where or how you want to spend your loan proceeds. Some borrowers use the money for minor home improvements, as vacation allowance, and even for the kids’ school expenses.
Prohibitions in Military Cash Loans
The US government puts the welfare of all servicemen and women on top of its list. The least that the government can do is make sure servicemen and women do not have to be worry about financial issues. With this in mind, the government has come up with rules that make military loans less burdensome to military personnel and veterans.
The likelihood that an American military serviceman or woman will take out a cash loan is about three times more than ordinary citizens. That’s generally because of the low pay and the fact that most active members of the military are young people who do not have much experience about handling their personal finances. As a result, many of them are susceptible to unfair loan practices. Thus, the John Warner National Defense Authorization Act lays down the limitations on military cash loans.
The Military Lending act effectively puts payday loans out of service. Payday loans typically charge interest rates of up to 400%. Now, the law limits the interest rate on most types of military loans to no more than 36%.
The law also prohibits lenders from lending money via check or other ways where access to the borrower’s financial accounts will be required as form of security for the loan. Also, lenders cannot roll over, refinance, renew or consolidate other types of credit issued to a serviceman or woman.