SCRA maximum loan interest rate

[Guest sleepy]

If I used the wrong search terms, I'll help setup the stake.

Source

SCRA: Interest Rate Limits

One of the most significant provisions under the Servicemember's Civil Relief Act (SCRA) limits the amount of interest that may be collected on debts of persons in military service to 6 percent per year during the period of military service.

The expanded SCRA further states that no interest above 6 percent can accrue for credit obligations while on active duty, nor can that excess interest become due once the servicemember leaves active duty – instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.

I've looked and am still looking. Does anyone know about this? I'm wondering if it is good for any loan, secured or unsecured. Sallie Mae is starting to piss me off (again) on a student loan.

[ 01. September 2006, 05:41: Message edited by: Toro ]

[Guest sleepy]

Found some info. Hope it helps someone. Looks like student loans aren't included. F-cking Sallie Mae!

[Herk Driver]

Don't know about your specific loans, but it only applies, in general, to loans that were entered into prior to military service. I tried to get my mortgage dropped several years ago and they said, No, since my loan application showed USAF as my employer when I applied for the loan.

[Guest KoolKat]

Incorrect. I believe there is a requirement as to when you took the loan, but I'm not a 100% positive what it is.

I took my student loan, which was eventually sold to sallie mae, while I was in ROTC, so technically enlisted already. However, I don't think this matters.

Sallie Mae, if I have "someone" sign a letter stating that I am on AD, they will cap my loan at 6%.

...for a year. Then they jack the intrest rate up to 9.5% without telling me until I send the SAME EXACT F_CKING LETTER to them again.

Bottom Line, they will do it. They will still be a pain in your ass, but they will still do it.

Sallie Mae is the only student loan I have that doesn't already have less than a 6% intrest rate normally anyways. As you so eloquently put it..."F-cking Sallie Mae!"

BENDY

[Guest KoolKat]

A research from SM's website could create an issue.

"Military payment relief is available to eligible FFELP and Private credit borrowers who are members of the regular U.S. Armed forces reassigned to duty stations, and those Reserve and National Guard members called to active duty."

I highly suggest you do a couple things. One is try searching again. I know that either Toro and myself have commented on the Soldier & Sailor Civil Relief Act before. It's around here somewhere.

Two is to try and find the offical website and get a copy of the act for yourself & read it to see how applicable it is for Guard members that aren't currently mobilized/deployed.

I'm not sure what the answer is for you & I've run out of usefulness.

Time to finish my coffee and see if none of the airplanes break & I can actually fly in a formation larger than a 2-ship for a change! ha.

BENDY

[Guest KoolKat]

I know how much you love legalese...

BENDY

[Guest sleepy]

Bendy,

Thanks dude. I'm not shipping beer to Japan. It's the thought that counts, though. I got some Thai beer. Tsing Tao or something. Good stuff.

Attention youth of America: don't get a student loan through Sallie Mae. If they buy it, do something (don't know what, but by god do SOMETHING about it.) When I got out of school and entered the "real world," I had five loans: one each for four years of undergrad, and one for a year of grad school. After two months of writing five checks, I did the consolidation thing. SM wouldn't "let me" for some dumb, self-serving, let's f-ck him up the ass reason. Years later, I still make two payments. One has a fixed interest rate, but SM keeps going through the roof. I nearly downloaded a rectal brick the other day when I went to make a payment.

All right, happy thoughts...Merle Haggard music, hot date, cold beer...ahh...Blood pressure normal. B1tch switch off.

[Herk Driver]

Originally posted by Bender:

Incorrect. I believe there is a requirement as to when you took the loan, but I'm not a 100% positive what it is.

I took my student loan, which was eventually sold to sallie mae, while I was in ROTC, so technically enlisted already. However, I don't think this matters.

Sallie Mae, if I have "someone" sign a letter stating that I am on AD, they will cap my loan at 6%.

...for a year. Then they jack the intrest rate up to 9.5% without telling me until I send the SAME EXACT F_CKING LETTER to them again.

Bottom Line, they will do it. They will still be a pain in your ass, but they will still do it.

Sallie Mae is the only student loan I have that doesn't already have less than a 6% intrest rate normally anyways. As you so eloquently put it..."F-cking Sallie Mae!"

BENDY

If the loan was entered into prior to military service then you can get the interest capped at 6%.Here's the section of the SCRA that details it.

Section 207 - Maximum rate of interest on debts incurred before military service

(a) INTEREST RATE LIMITATION-

(1) LIMITATION TO 6 PERCENT- An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.

[Guest JimmyH]

Well that would have been nice to know earlier! I've been in for over two years now... When I called all the various institutions that I owe money to when I first joined to ask about military benefits, etc not a single one mentioned this (not surprisingly). Looks like I have some phone calls and paperwork to get on this week.

I'm curious-- is it retroactive to the EAD? Most of my variable-rate loans have risen past 6% (some quite far past) in the last two years and it would be VERY nice to either get that money back or at the very least have it applied to the principles of the loans. Though that sucks for some of the loans I've managed to pay completely off. If not, at least I won't be saddled with crippling debt if this all pans out.

Hmm...

§ 527. Maximum rate of interest on debts incurred before military service

[sec. 207](a) Interest rate limitation

(1) Limitation to 6 percent

An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a

servicemember, or the servicemember and the servicemember's spouse jointly, before the

servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year

during the period of military service.

(2) Forgiveness of interest in excess of 6 percent

Interest at a rate in excess of 6 percent per year that would otherwise be incurred but for the prohibition in

paragraph (1) is forgiven.

(3) Prevention of acceleration of principal

The amount of any periodic payment due from a servicemember under the terms of the instrument that

created an obligation or liability covered by this section shall be reduced by the amount of the interest

forgiven under paragraph (2) that is allocable to the period for which such payment is made.

(B) Implementation of limitation

(1) Written notice to creditor

In order for an obligation or liability of a servicemember to be subject to the interest rate limitation in

subsection (a), the servicemember shall provide to the creditor written notice and a copy of the military

orders calling the servicemember to military service and any orders further extending military service, not

later than 180 days after the date of the servicemember's termination or release from military service.

(2) Limitation effective as of date of order to active duty

Upon receipt of written notice and a copy of orders calling a servicemember to military service, the

creditor shall treat the debt in accordance with subsection (a), effective as of the date on which the

servicemember is called to military service.

© Creditor protection

A court may grant a creditor relief from the limitations of this section if, in the opinion of the court, the

ability of the servicemember to pay interest upon the obligation or liability at a rate in excess of 6 percent

per year is not materially affected by reason of the servicemember's military service.

(d) Interest

As used in this section, the term "interest" includes service charges, renewal charges, fees, or any other

charges (except bona fide insurance) with respect to an obligation or liability.

Apparently I don't speak this language. That makes only enough sense to me to approach a bank, but not unswindle my money back from them.

[ 20. August 2006, 00:01: Message edited by: JimmyH ]

[Guest rangerbob5]

Take a 36 month military deferment.

[AA]

Yes it's retroactive to EAD. I invoked my rights under SCRA almost a year into active duty and I received some nice refunds. I've done this on the mortgage, home equity line, and several credit cards. My student loans are lower than 6%.