On July 29, 2022, the Department of Justice (“DOJ”) and the Consumer Financial Protection Bureau (“CFPB”) issued a notification letter (the “Joint Letter”) to “remind” auto lenders and leasing companies of the protections provided to servicemembers and their dependents under the Servicemembers Civil Relief Act (“SCRA”). The Joint Letter provides a basic overview and reminder of the vehicle repossession protections, early vehicle lease termination rights, and interest rate cap available to eligible servicemembers under the SCRA.
The CFPB press release announcing the joint letter cites a 2020 CFPB report titled “Financially Fit? Comparing the Credit Records of Young Servicemembers and Civilians.” According to that report, approximately 20% of young servicemembers have at least $20,000 in auto debt by the age of 24, and this percentage is reported to be significantly higher than for civilian borrowers in the same age cohort. According to the CFPB, young servicemembers also generally have higher delinquency and repossession rates than civilians of the same age, although those rates level off after five years of active-duty service.
The Department of Defense operates a free and publicly accessible database where lenders can verify a borrower’s military status at https://scra.dmdc.osd.mil.
MPM supports our servicemembers, and we are able to help with questions lenders may have regarding the protections given to them by the SCRA.