Have you heard of something called a tribal loan? Tribal lenders are a great solution for those in need of short-term financial help that may not qualify for other loans or live in a state where payday loans aren’t legal.
Understanding what tribal loan lenders do and how native American payday loans are different from regular ones can help you access this resource safely, despite the controversy surrounding them.
What Are Tribal Lenders?
The first step to understanding what tribal lending companies do is to learn about who they are first. Native American tribes on protected land for reservations have the resources and revenue to fund a loan business, one that doesn’t operate under state laws, but instead rely on the sovereignty granted to these tribes.
Lending companies like this don’t have to follow the same laws that non-tribal loans do from state to state, but they do obey federal regulations. They are also protected by the Online Lenders Alliance. Some may try to operate through third party hosts, but these aren’t nearly as reliable as the reputable companies.
What Are Tribal Installment Loans?
Put simply, tribal installment loans are an alternative option to regular payday loans. They work pretty much the same and offer many of the same kinds of loans, just minus the state interference. There are a few differences between installment loans and payday loans, but once you begin to understand the basics, it falls into place.
Some of the differences between the two types of loans:
- Installment loans don’t roll over each month
- Flexibility in repayment each month instead of having to back the amount back all at once as you’d do with payday loans
- Often, tribal loans have larger amounts to offer
- Longer payment plans
How Tribal Lending Companies Operate
The NAFSA (Native American Financial Services Association) consists of a group of different tribes over the USA that work to provide small loans through installment plans to both tribal and non-tribal consumers through a variety of online services.
The exact small dollar amounts vary between which tribal lender you work through and what you can get approved for. They usually can go up to $2,000 and as low as a couple hundred. Businesses have greatly benefited from tribal loans, especially start-up Native American companies that offer housing, food, and other amenities.
Are Tribal Loans Safe?
Whenever something different and unusual is suggested concerning your money, there is bound to be controversy around it. Because of the way tribal loan companies can skirt around common regulations, many people are nervous about if they can be trusted. Most of the time, taking out a tribal loan is completely safe and a great option, especially since it can be done in states where other kinds of payday loans are illegal.
However, like anything regarding a financial change concerning your credit, there is a few risks involved. It’s up to you to decide if the benefits outweigh them.
Some of the benefits that tribal loans can provide:
- DIfferent qualification method. Tribal lenders don’t just go off of income and credit score to approve or deny a loan. This opens up the doors for those with less than desirable circumstances or without a bank account.
- A reliable alternative where payday loans aren’t possible. Some states have outlawed or made strict regulations surrounding it because of the high APR. Because of their sovereignty, tribal loans offer loads more freedom.
What risks to keep in mind and try to avoid:
- You won’t be able to sue the company. Just like the sovereignty that grants them permission to ignore certain rules, it protects them, too, so if something goes wrong, there isn’t much you can do to rectify it through the court system.
- Higher APR. Since everything is done on their own terms and land, many tribal loan companies include higher APR and additional fees than you’d find through another source. This won’t be a problem if you have a guaranteed plan for repayment.
Indian Tribe Loans for Bad Credit
Though having bad credit may be a reason for disqualification, the rules for acceptance are much more lax through tribal loan companies than non-tribal. This makes it easier for someone with a lower credit score or alternative means of income to get accepted for higher amounts.
Tribal loans come with a high APR naturally, just like any payday or short-term loan does, so they have the reassurance they get their revenue returned. One of the reasons tribes are so eager to accept those with lower qualifications is to provide a safe, reliable alternative that people can trust, plus it brings some business to isolated tribes and reservations.
Comparing Your Options
Before jumping into the application process for an Indian Reservation Payday loan, it’s important to familiarize yourself with the options available to you. These are the 5 leading companies, complete with the best advantages each will offer you through this experience.
Holding the top of the charts as far as reliability go, the Blue Trust Loans is a member of the OLA and a federally recognized tribe. Their stand out by offering:
- 6-month loan terms
- Maximum account balance at $2,000
- Next-day turnaround times
- Tiered club program for higher loan amounts
A large umbrella company that works with many loan businesses, including but not limited to tribal lenders. With tribal loans, you can expect to receive:
- $1,000 for a first-time borrower, reaching up to $1,200
- Multiple loan term offers
- Lower APR, though it varies
- No fees!
A Michigan based tribe formerly known as Castle Payday now carries on its reputation as a reliable tribal loan company under the new name. Their terms are a bit stricter, but protected. Be prepared for these terms:
- Payment term lasts 14 days
- $35 fee for each $100 borrowed
- Maximum limit caps out at $1,500
- Next-day turnaround
- Extra requirements needed
For cautious minds, this federally-recognized tribe has lower amounts available with more security offered. Some of the features their loans include that put worries to ease include:
- $1,000 maximum loan amount
- 18-month loan term
- Fixed interest rates
- 750% starting APR
- Lax rules on bad credit