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April 20, 2021

Maximum Rates of Interest

I have a car loan that I took out before I joined the military. I am having a hard time making the monthly payments now that I’m in the service. Can I get my payments lowered?

The SCRA may require your creditors to lower the interest rate to 6% on most debts that you incurred prior to joining the military. If you qualify, creditors must recalculate your monthly loan payment based on the lowered interest rate. This rate will be retroactive to the date that you were called to active military service, and will extend throughout your active military service. For home loans such as mortgages and deeds-of-trust, the reduced rate will continue for one year after you get out of the military.

Talk to your military legal assistance attorney to learn more and find out if you may qualify, along with the best ways to request interest rate reductions from your creditors.

I have been in the Army Reserve for a number of years. I just found out I am being mobilized to deploy overseas. I have a mortgage I took out on my home last year. Can I request an interest rate reduction for the period while I am on active duty?

Yes—if you were not on active duty when you took out the mortgage, it is considered a preservice debt that can have its interest rate adjusted down to no more than 6% during your period of active-duty service overseas.

I requested a rate reduction on a preservice loan, and the bank has ignored my request. What do I do?

It can be a federal crime for a creditor to fail to observe your SCRA rights with respect to an interest rate reduction request. Talk with your military legal assistance attorney about the steps to take next.  Frequently, it’s just necessary to go “up the chain of command” in the bank; or to contact the bank’s legal counsel, to resolve such an issue.