Defense officials are considering broadening their interpretation of a law that placed a 36 percent interest rate cap on small loans to troops and their families.

The 2007 Military Lending Act put certain limits on credit extended to military personnel for loans that aren’t secured by mortgages or by cars. But the Defense Department, in setting up the rules to implement that law, limited regulations to payday loans, vehicle title loans and refund anticipation loans. The DoD also limited the law to “closed-end” loans — a single advance of credit over a fixed term. Open-end credit, including all credit cards, bank overdraft lines of credit and any open-end payday or vehicle title loans, are not restricted by DoD.

A recent report from the Consumer Federation of America found that some car title lenders and Internet payday lenders are taking advantage of the limited definitions to skirt the law.

Those findings echo what DoD officials have heard from the field, said Army Col. Paul Kantwill, director of the office of legal policy in the Office of the Undersecretary of Defense for Personnel and Readiness. Kantwill testified June 26 before the Senate Banking, Housing and Urban Affairs Committee.Click here to read more

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