SCRA – Is 6% the Interest Rate or the APR?
Answer by Dan Persfull, BOL Guru Guru Bio
Question: Under the SCRA, when reducing the rate to 6% on pre-service obligations is the 6% the interest rate or the APR?
Answer: From 207:
. . . shall not bear interest at a rate in excess of 6 percent per year during the period of military service . . .
(d) INTEREST- As used in this section, the term `interest' includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability.
If you change the rate to 6% and charge a $5 late fee then you have exceeded the interest rate allowable under the SCRA. The best course of action is to set the interest rate to 6% and waive all other fees for the term of active duty.
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