My compliance days are long gone but someone asked why we won't do a non-purchase, auto secured loan for 180 days. I remember those, payday loans and tax refund loans were all grouped together to not do but can't remember the why behind it. Anyone have time to jog my memory so I can answer the question?

Many FIs stopped doing 180 day or less non-purchase auto loans due to the MLA. Some FIs did away with them all together others extended the term to 182 days. They made the change so there would not be a disparate impact implication against military personnel if they would do a 90 day note for non-military but would only do 182 days for military.

If I remember correctly if the loan was 180 days are less the MAPR could not exceed 36%. With revisions to the MLA that 36% limitation now applies to covered loans regardless of term.

232.4
(b) Limit on cost of consumer credit. A creditor may not impose an MAPR greater than 36 percent in connection with an extension of consumer credit that is closed-end credit or in any billing cycle for open-end credit.