Several sources of low-interest (or interest-free) loans are available for the military to help pay for emergency expenses. These are alternatives to the high cost payday lenders that have traditionally targeted military personnel.
Members of the military can take out small interest-free loans for emergencies through their branch of the military’s emergency relief fund. Contact your base’s Community Services office for more details, or visit Army emergency relief, Navy-Marine Corps Relief Society, Air Force Aid Society Where Coast Guard Mutual Assistance.
Loans are generally limited to around $ 1,000 and are approved on a case-by-case basis. You usually need to provide information on bills that you are having difficulty paying or other documents demonstrating the urgency of your need. Loans are typically made to help with essential home repairs, car repairs, moving security deposits, disaster relief, food, rent, mortgage payments, medical bills or expenses. funeral expenses. Before you receive a loan, you usually meet with a social worker, who can also work with you to budget and help stabilize your finances.
Another good source is military credit unions. 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 credit check or even no credit check.
And you’re right – the law cracked down on high-cost payday lenders, who lined the streets near military bases. The 2007 Military Loans Act caps the interest on many of these loans to members of the military at 36% (previously some lenders charged more than 400% interest). But there are some loopholes in the law – it only applies to indefinite loans of $ 2,000 or less with a term of 91 days or less – so some lenders offer high interest loans with longer terms. , loans of larger amounts or loans with no fixed end date.
For more information on the Military Loan Act and how to protect yourself against high interest payday loans, see the Consumer Financial Protection Bureau’s What Military Families Should Know About Payday Loans. You can also file payday loan complaints to CFPB through its payday loan complaint page or by calling 855-411-2372.
For more information on the personal finances of military families, see the Top 10 Financial Benefits for Military Families, the Financial Field Manual: The Personal Finance Guide for Military Families, and our special report on Military Families.
In honor of Veterans Day, also check out our special Free Social Security Tips for U.S. Veterans program.