The bill is a follow-up to the Military Lending Act of 2006, which created transparency requirements and limited what could be offered to military members.
Those rules applied to loans up to 2-thousand dollars and 90 days.
“The industry, as industry is prone to do, found a way around the law,” said Rep. Dan Kildee (D-Flint), “and began to offer loans of 91 days, loans of $2,000 or more, even if that wasn’t necessary for the service member.”
“And of course those sorts of loans are not subject to the Military Lending Act, and in some cases will bear interest rates that are well beyond what’s reasonable,” Kildee said.
In one case, Kildee said a soldier needed a $1,600 short term loan, which ended up costing $17,000 over the life of the loan.
Under legislation Kildee is sponsoring, short-term lenders would be required to provide military members with a detailed descriptions of the costs of loans and available low-cost alternatives.
“The lender would have to give the service member a table, a description, of the actual cost of the loan over the life of the loan, including all the interest that would be paid,” Kildee said. “The same thing that any of us see when we sign a mortgage.”
According to Kildee, several of his colleagues have voiced their support for the legislation, but he’s unsure when it might be taken up by a house committee.