The Act was designed to protect active-duty service members and their dependents in credit transactions. The protections include certain disclosures, arbitration provisions and a 36 percent interest rate cap on a finance agreement combined with ancillary and credit products.
Until recently, motor vehicle finance transactions were believed to be exempt from the act. Only auto title loans had to comply with it.
Under the latest interpretation, if a vehicle finance contract for active military members or their dependents includes financing for credit-related products or services, such as guaranteed asset protection or other types of credit insurance, the dealership and lender must comply with the act. Although the interpretation was published in December, the Defense Department says it has been in effect since the rule was amended Oct. 3, 2016.