CUNA Seeks Exclusions from new Military Loan Rate Cap

WASHINGTON – CUNA called on the Department of Defense yesterday to exempt a variety of fees and charges when calculating the new 36% rate for loans to military personnel. In a letter to the Pentagon, which is developing implementing rules for the new anti-predatory lending law, CUNA asked that optional products and services, like GAP insurance, vehicle warranties, credit insurance and identity theft prevention be excluded from the calculation. CUNA also urged an exclusion for overdraft privilege and courtesy pay fees. Including the costs for these products and services “will very likely result in an APR that exceeds 36%, “and will likely prevent credit unions from offering these products and services to military members, said CUNA, in a letter signed by President Dan Mica and Roland ‘Arty’ Arteaga, director of the Defense CU Council. One way to do this would be to exclude charges for products and services that are offered voluntarily as part of a loan, said the letter. The bankers are also lobbying the Pentagon to exempt many of these same products and services from the new usury limit.