A legislative effort underway to expand and toughen the Military Lending Act, which regulates loans to military service members on active duty, is drawing pushback from a lender trade group.
Sen. Bill Nelson, a Florida Democrat, introduced legislation last week. Dubbed the "Military Lending Act Improvement Act of 2018," the bill would extend coverage of the Military Lending Act to veterans for one year after discharge and also would lower the maximum annual percentage rate that can be charged to military members to 24 percent, from 36 percent currently.
"AFSA opposes this legislation," Bill Himpler, executive vice president of the Washington-based American Financial Services Association, told Automotive News. AFSA members include many of the largest auto lenders.
The so-called military annual percentage rate is an all-in figure that includes fees and other one-time charges as if they were being financed on an annual basis. That has the effect of inflating the rate, especially for extremely short-term loans, experts say.
The new bill is one of several fronts where the Military Lending Act is drawing the attention of the auto finance industry.