If you're on active duty, a federal law called the Servicemembers Civil Relief Act (SCRA) can lower the interest rate on an auto loan to 6%, but only if you took out the loan before you entered active duty. It also limits repossession of a vehicle financed before service. It does not reach back and cap a loan you sign while already on active duty. That distinction matters if you're shopping for a car loan right now, so it helps to know what applies before you apply.
Everything below comes from the CFPB's SCRA page, its Ask CFPB answer on military loan limits, a joint DOJ-CFPB letter to auto lenders (July 2022), and the CFPB's January 2025 report Auto Lending to Service Members. We opened each one for this article. It's general information, not legal advice.
The CFPB says people covered include:
Under the SCRA, the CFPB says you can lower the interest rate on loans you took out before entering active duty, including auto loans, to 6 percent. It can apply to loans taken out on your own or with a spouse. The CFPB lists the steps:
What happens next, per the CFPB and the DOJ-CFPB letter:
The CFPB says lenders can't take back property, including your car, if you fall behind unless they first file a lawsuit and get a court order. The page lists how to tell if it applies to your vehicle:
The DOJ-CFPB letter adds that servicemembers aren't required to give notice of military status to receive this protection. The burden is on the lender to identify protected borrowers, and a lender who knowingly repossesses a protected servicemember's vehicle may be guilty of a misdemeanor.
The CFPB says you may be able to end an auto lease without penalty if you signed it before being called to active duty for 180 days or longer, or you signed it during active duty and then received orders for a PCS from the continental U.S. to outside it, a PCS from outside the continental U.S. to any new location, or a deployment of 180 days or longer. You send written notice with a copy of your orders, and the end takes effect 30 days after the due date of your next payment. The CFPB adds that this doesn't apply to a change of station from one continental U.S. location to another, and it suggests checking whether your lease allows you to take the vehicle out of state before you sign.
The CFPB warns that some lenders might ask you to waive your SCRA rights when you take out a loan. It says that removes your protections and that you have the right to refuse and find another lender. Read the contract before you sign, and ask about anything you don't understand.
SCRA benefits are tied to when the debt began, so timing matters:
If you're also comparing preapproval letters, see preapproval vs. prequalification so you know what's actually on the paper.
The SCRA can cap interest at 6% on auto loans taken out before active duty and can require a court order before repossession, but it doesn't cap a loan you sign while already serving. If you have an older loan, send your lender a written request with your orders. If you're getting a new one, treat the rate you're quoted as the rate you'll pay and compare offers before you sign.
Check your pre-approval: Start the form. No SSN required to begin.