A regional office of the Better Business Bureau is warning Fort Hood soldiers about local payday loan businesses, after reports that some of them are using unfair business practices.
Helen Moore, director for the BBB’s regional office in Waco, said concerns were raised by organizations at Fort Hood that were getting multiple reports from service members who borrowed money from such businesses.
“We saw soldiers being charged excessively high interest rates,” Moore said. “I saw one case where a soldier was charged a 1,748 percent interest rate.”
The Military Lending Act of 2006 says lenders can charge soldiers at no more than 36 percent interest on short-term loans. However, Moore said lenders can use loopholes in those federal regulations to get around the requirements.
“There is concern and a desire by lots of people to close those loopholes,” Moore said. “There are lots of people who get caught in this payday loan quagmire.”
The Army does offer some programs to help soldiers in financial need, including the Army Emergency Relief fund, which provides emergency financial assistance to active and retired soldiers and their family members.
Moore said service members, and anyone else considering taking a payday loan, should exhaust all other possibilities before going to a short-term lending business.
“You really need to have a clear plan on how you’re going to pay that money back in the allotted time frame,” Moore said. “You need to have a plan before you take that loan out.”