Military Families are you target for Predatory Lending?

Military personnel across the country are put in harm’s way but they and their families are also asked to move frequently on new assignments which trigger relocation costs that the average family doesn’t do. Military personnel on average have low pay scales as well which often hinder relocation moves and force them to seek loans that they might otherwise not seek.

Sometimes these financial difficulties can lead to security clearances being withdrawn and possible discharge.

Navy Federal Credit Union Manager, Claudia Warszawski tells her military families who have over extended themselves and are looking for quick fixes to pay off debts or make a quick buck that if it sounds too good to be true; it is. Her advice goes for civilians as well.

She warns that if you go to payday lenders check cashing outlets or pawn shops to tide your financial stress over that you really need to realize how expensive those loans can be. The calculation on the true cost of these loans and the rates involved are staggering.  She states that Military Personnel Financial Services Protection Act of 2006 caps the rate that financial institutions can charge military personnel at thirty six percent. Civilians however can be charged an annual rate of over four hundred percent.

She says that on base banks or credit unions are the best option for military personnel for routine banking transactions however she states that many go off site for their financial needs and when they do they are responsible for informing the lending institutions of their military status otherwise they are not protected under the act.

She believes that civilians and military personnel experience financial hardship because they are living beyond their means. Many don’t follow the budget. She also states that each military unit is responsible for ensuring all personnel maintain financial stability. She advises that if you are in the military and you’re having financial hardships to consult your command. The command offers free financial specialists to assist military personnel in regard to their finances and arrange a budget.

She offers the following suggestions to avoid predatory lending:

All branches of the military have a relief society that can grant emergency loans, so before going to get a payday loan check with them first.

Even the thirty six percent that lenders are allowed to charge military personnel is extremely high; always explore your bank first or credit union.

Always read the documents before signing. Take the documents home first and make sure this is something you really need and not something you simply want.

Avoid pawn shops and loans that use your cars title as collateral; if you fall behind on payments you could lose ownership of your car.

Set up your paycheck to have an automatic withdraw into savings that you can use for emergencies instead of having to go to payday loan shops.

Always check with the bank or credit union for special benefits that they may give to military personal.

She also suggests the following agencies to seek information from:’s Finance Site

Service Nation’s Mission Serve

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