New Law Protects Service Members From Predatory Loan Practices
By Melanie Arvonio, Airman and Family Readiness Center
/ Published October 04, 2007
Los Angeles Air Force Base -- A new California law limiting payday loan offerings to service members took effect, Oct. 1.
Under the new law, Senate Amendment 4331, annual interest rates on new loans to service members will be capped at 36 percent, in contrast to average annual interest rates that currently exceed 400 percent. Lenders will be prohibited from using service members' personal checks or other means to access their bank accounts and may no longer accept service members' vehicles as collateral.
Consequently, service members will no longer be a profitable market for payday lenders. In reaction to this new law, staff at the Airman & Family Readiness Center expect payday lenders to request loan payment in full when loans to service members expire. Lenders may call in collateral if service members cannot immediately pay off their loans.
The A&FRC said the Air Force Aid Society stands ready to assist some service members who may be affected. AFAS will help in some cases where assets such as vehicles are at-risk, and will review other requests for assistance on a case-by-case basis.
Free financial counseling is available by appointment at the A&FRC to all service members and government civilian employees. For more information about receiving assistance from the AFAS or to schedule a financial counseling appointment, call the A&FRC at 310-653-5428.