By Judith Snyderman
The Defense Department is taking steps to protect servicemembers from predatory lending practices. In an interview with the Pentagon Channel, Marcus Beauregard, a program analyst for the Pentagon’s military community and family policy office, said several factors contribute to making servicemembers vulnerable to getting in over their heads financially.
One problem he said is that servicemembers may appear to be attractive clients because they have a steady paycheck and, especially for those who live on installations, appear to have discretionary income. For servicemembers who have already obligated themselves to sizable debts, some unscrupulous operators may extend additional loans beyond the servicemember’s ability to repay.
Beauregard said that when commanders became aware of certain credit products repeatedly causing problems and stress for servicemembers, they brought it to the attention of DoD leaders.
Bad lending practices could impact mission readiness, Beauregard explained, because “If [servicemembers] are paying more attention to their financial concerns, they are paying less to their primary mission and their primary job.”
To address the problem, Defense officials are increasing financial training and counseling services and communicating with lawmakers.
“We work with regulators at the state and federal level to ensure that they are aware of the needs of servicemembers,” Beauregard said. He added that DoD is making sure laws like the Military Lending Act and a DoD regulation for predatory lending are being enforced and that examiners are going out to monitor creditors for compliance.
Beauregard offered warning signs that may alert servicemembers to questionable lending practices:
“If somebody offers credit without asking for a credit check, it should be a signal that they are looking at something else to underwrite that loan and not necessarily credit worthiness,” he said.
A short-term loan with a lump sum repayment at the end instead of in increments could also spell trouble for servicemembers Beauregard said, because, “If they didn’t have the money at the beginning of the loan they are probably not going to have the money at the end of the loan.”
More advice includes, “Don’t take things at face value.” Beauregard warned that, “Just because [a loan company] says it is ‘military’ doesn’t necessarily mean they are going to take care of somebody in the military. There are a lot of good companies with military affiliations, but there are also some bad ones out there.”
“Don’t sign anything you don’t fully understand,” he added. Especially when under pressure from money woes it’s vital to, “Take a deep breath, stop and then reconsider.”
Beauregard said it’s better to get advice before taking out a loan rather than seeking help after getting over obligated. He recommended visiting the website Militaryonesource.com, a unit advisor, an installation financial counselor or a legal advisor before signing on the dotted line for a loan.