Whitepaper Highlights MAPR's Negative Effect on Access to Credit

Today, AFSA’s State Government Affairs department published its All-in APR white paper. Until the advent of the “all-in” Military Annual Percentage Rate (MAPR), state legislation that sought to impose interest rate caps used Annual Precentage Rate (APR) definitions consistent with the Truth in Lending Act (TILA). After 2007, a minor trend emerged with some lawmakers attempting to incorporate the MAPR method of calculation into lending laws that applied to all consumers, not just active military personnel. AFSA’s white paper provides an overview of measures taken by states to impose rate caps with APR variants more broad than TILA on certain forms of lending. It also highlights legislative trends and recent state legislation that would set rate caps using an APR calculation consistent with TILA.

Redefining APR broadly based on the Department of Defense’s MAPR model would have a severe detrimental effect on the ability of financial institutions to continue to provide credit to consumers. All-in rate caps undermine the decades-old, well-understood, and reliable standard set by the TILA calculation of APR and risk creating widespread confusion as to appropriate disclosures for consumers and artificially lowering effective APR. AFSA is committed to monitoring the ongoing evolution of the laws and regulations surrounding all-in rate caps.

AFSA’s State Government Affairs team publishes white papers monthly, and members can find previous papers on AFSA’s website under the SGA Resources section.