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credit & debt

Low-Cost Loans for Members of the Military

Skip payday lenders. Military emergency-relief funds and credit unions are much better options.

Where can members of the military get emergency loans other than through payday lenders? Wasn’t the law supposed to stop payday lending to members of the military?

Several sources of low-interest (or no-interest) loans are available to members of the military to help them pay emergency expenses. These are alternatives to the high-cost payday lenders that have traditionally targeted military personnel.

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Members of the military can take out small interest-free loans for emergencies through the emergency-relief fund for their branch of the military. Contact the community service office at your base for details, or visit Army Emergency Relief, Navy-Marine Corps Relief Society, Air Force Aid Society or Coast Guard Mutual Assistance.

Loans are usually limited to about $1,000 and are approved on a case-by-case basis. You generally must provide information about the bills you have trouble paying or other documents showing the urgency of your need. Loans are typically made to help with essential home repairs, car repairs, security deposits when moving, disaster relief, food, rent, mortgage payments, medical costs or funeral expenses. Before receiving a loan, you usually meet with a caseworker, who can also work with you to establish a budget and help stabilize your finances.

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Military credit unions are another good source. They often offer short-term loans at reasonable interest rates, and some even offer small emergency loans to members of the military with a quick or even no credit check.

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And you’re right -- the law did crack down on high-cost payday lenders, which used to line the streets near military bases. The Military Lending Act of 2007 caps interest on many of these loans to members of the military at 36% (before then, some lenders were charging more than 400% interest). But the law does have some loopholes -- it applies only to closed-end loans of $2,000 or less with a term of 91 or fewer days -- so some lenders have been offering high-interest loans with longer terms, loans of larger amounts or loans without fixed ending dates.

For more information about the Military Lending Act and how to protect yourself from high-interest payday loans, see the Consumer Financial Protection Bureau’s What Military Families Should Know About Payday Loans. You can also submit complaints about payday loans to the CFPB through its payday loan complaint page or by calling 855-411-2372.

For more information about personal finances for military families, see 10 Best Financial Benefits for Military Families, the Financial Field Manual: The Personal Finance Guide for Military Families, and our Military Families Special Report.

In honor of Veterans Day, also see our Free Social Security Advice for U.S. Veterans special program.

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