What’s the Fuss about the US Military Loan DOD 232?

The US military is concerned about the well-being of its servicemen and women. When you consider the stresses they face on a daily basis: training, serving abroad, being parted from loved ones, combat, and the war on global terrorism etc. the last thing they need added to all that is worried about their finances.

So it was that the DOD (the Department of Defense) drew up a document called 32 CFR Part 232 to deal with the whole issue of limiting the terms of consumer credit that is extended to servicemen and women.

What’s the Big Idea?

The idea behind this – US Military Loan DOD 232 was to create a plan to accomplish several key

Next, there is the matter of saving money. It is a sad fact of nature that Americans do not save enough, and military personnel are among the worst offenders. So, DOD 232 aims to help them take control of their finances by putting more money away in savings.

Secured of Unsecured

There are plenty of instances where people need a loan. Yet, there is a difference between secured and unsecured debt, and not just the fact that an unsecured loan has no collateral behind it. An unsecured loan generally has a higher interest rate, and people usually get them when they are very desperate for money.

Given the low pay of the military, it is sad fact of life that many military personnel live paycheck to paycheck. Also, as many servicemen and women are quite young (in their early twenties), they can easily fall victim to predatory lenders.

Since they are not knowledgeable about lending practices, current interest rates etc. and need money, they will often agree to terms and conditions that are excessively high and unreasonable.

What the DOD 32 does

Because of all of these facts, the US military loan DOD 232 document is designed to help teach financial awareness and education. The DOD has drawn up lists of lenders it considers safe and reasonable for its personnel to use, as well as non-profit groups that will help servicemen and women to create a monthly budget, manage their income, apply for and properly use credit cards, and what sort of loans are fair and reasonable.

One of the chief forms of high-cost loans is a tax refund anticipation loan (a RAL). The US military loan DOD 232 addresses this type of loan, and argues against using it. Very often, people want their income tax refund as quickly as possible.

Well, a RAL gets you your refund immediately, but that benefit is offset by the high fee of the service. In some cases, it is over one hundred dollars. Then there is the interest rate charged on a RAL; often times it is triple digit!

Because of all of the pitfalls and financial dangers facing military personnel, the DOD has various Military Aid Societies, military banks, and the defense credit unions to help their people deal with money. All of these matters are outlined in the report US Military Loan DOD 232, something every serviceman and woman should read and become familiar with.