By: Moisés Reyes
For members of the U.S. military, the process of obtaining a cash advance, or payday loan, is considerably easier and more affordable than trying to get a typical civilian cash advance. When faced with financial trouble that calls for quick cash, servicemen and women are at an advantage in getting military payday loans to help them out at a time of need. Thanks to the Service Members Anti-Predatory Lending Protection Act (HR. 97), these military cash advances are designed to make the process of getting them convenient and secure for all service members.
The Perks of Military Cash Advances
The military market has been particularly vulnerable to predatory lending practices from payday loan lenders. The most controversial and harmful of these practices are the charging of exorbitant fees and annual percentage rates, which have been known to sometimes be set at more than 500%. Also, the "rollover" of refinancing small short-term loans often breeds a vicious cycle of debt that only leads to more financial difficulty.
Luckily, the purpose of the Service Members Anti-Predatory Lending Protection Act is to prevent these common predatory practices from occurring to servicemen and women with little to no financial management skills. Under the legislation, the annual percentage rate charged to service members is capped at 36%, significantly lower than most civilian cash advances, and a military member is not allowed to enter into another payday loan immediately after the first one is paid off. These conditions are designed to protect military members from being taken advantage of when trying to obtain a cash advance, and they prevent them from being sucked into the aforementioned cycle of debt that can ruin them financially.
What to Bring, Where to Go, and What to Do
Not much is needed for a service member to acquire a military cash advance. All that is required is military identification, a checking account, and a personal check. Civilian applicants are often required to provide income and bank information to attain a cash advance, but this isn’t the case with military members. Like all potential cash advance applicants, the first step is to contact a reputable local payday loan lender and inquire whether or not it provides cash advances to military members.
Although the Service Members Anti-Predatory Lending Protection Act protects servicemen and women against predatory lending practices, it has also made obtaining cash advances somewhat more difficult, since interest rates on these military payday loans are much lower than most civilian ones, which results in a loss of profit for the lender. Nevertheless, it’s still very possible to find a local lender that provides services to members of the armed forces.
Once you find a lender, go there with your military ID and a personal check. Also be sure to know exactly how much money you need to borrow and if you can easily repay it by the next paycheck period. After a loan amount is decided on with the lender, they will have you fill out a personal information sheet that asks for basic information such as name, address, and phone numbers. Once they have this information, a small loan agreement can be set up. This agreement will include a due date of generally two weeks to one month to pay back the loan, the amount of the loan, the lender’s fee, and a disclosure stating that the lender will hold the check until the due date, at which time it is allowed to cash the check, and that the borrower can be charged for insufficient funds. During this time it’s very important to carefully read all the fine print to be sure you agree with all the terms of the agreement.
After the loan agreement is signed, write a personal check to the cash advance center for the total amount of the loan plus the fee. The lender will hand over the cash, and they will hold the check as collateral until it is cashed on the due date. The process is designed to be a fast and convenient solution for military members facing a short-term financial emergency, but this is really the only time it should be used. Cash advances are not appropriate solutions for long-term financial issues.