There are certain Native American lenders that are helpful and can be quite useful in a financial pinch. It's important to start out by saying not all tribal loan companies are bad operators because that is not the purpose here.
Some of the installment lenders like Plain Green Loans and Mobiloans (which is technically a line of credit issuer) are decent sources of credit in an economy that has cut off all traditional forms of unsecured debt. Credit card companies are much more selective (that means they only want qualified people with good jobs) and the banks are not even interested in consumer lending at this point beyond issuing their typical overpriced car notes.
Having put some level of caveat against hating the entire tribal lending spectrum of companies I do have to say that the majority of these firms are not very good in a number of ways. They are not good operators in the sense that they charge too much for their loan products and they purposefully hope for borrowers to get entangled into a web of high interest debt. Who are these tribal companies? They are the tribal paycheck lenders and these are the Native American payday loans that they deal in.
Unlike an installment loan, which has anywhere from six to 50 scheduled repayment dates to get the loan paid off, the Native American payday loans are designed to last approximately 10 to 18 days, which is just enough time to get to the employees (the customers) next pay date.
Once that next payday arrives the customer will have to repay the tribal payday lender the money they had borrowed only a few days earlier and they will have to include (on average) a 30% interest charge, often known as the finance fee.
As if this wasn't bad enough there is something even worse about these tribal payday loans. The design of the loans is such that when that pay date arrives if a customer can't (or will not) allow for all their funds (the original amount of the debt plus the 30% interest charge) there is another option.
The borrower can opt to keep the loan alive, moving ahead past that pay date. Rather than paying any amount of the principal off the borrower simply pays just the finance fee, that's the 30% charge. That buys the customer another pay period, which for almost everyone these days is 14 calendar days until that second Friday arrives.
This is known as rolling the loan over because you really just rolled the exact same situation down the street. The loan is still intact, the customer makes no progress at paying down the debt. The finance fee was paid to the lender so they received their profit for that time frame. And everything is set to happen again, the same question will arise in 14 days.
Can or will the customer decide to repay the whole loan plus another 30% interest charge? In many cases they (the borrower) are unable to afford that high cost so they will once again choose the smaller payment (where they just pay for the finance fee) and roll the payday loan over a second time, thus scheduling yet another full repayment date down the road, specifically two Fridays away from the date of that rollover. This is a financial trap in case you didn't recognize it.
For many consumers there will never be a good payday where they can come up with the pile of money that's needed to both repay the finance fee for that period and to repay the full amount of the principal.
One more unfortunate thing about these loans is that they don't provide that much money in the first place, usually it ranges from $500 to $700 but can be as low as $200 and as high as $1,200. While this usually isn't enough money to help people out of a financial jam it can be enough to help for a few days or for some specific problem.
But it's the repaying portion that is the real difficulty. If you borrowed $600 and you owe a 30% finance charge at the end of the two week period, that's $600 plus $180 for a total due of $780 out of the consumers next paycheck.
Now a lot of people reading this will have paychecks that range from $700 to $1500 for every two weeks worked on their job. Let's say for argument that an average consumer has an $1,100 paycheck.
Now let's subtract the $780 from the $1,100 earned and we have a mere $320 to work with for the next two weeks, until the next pay period ends.
That's not enough money for many people, especially those with children, to live on. That's the catch. This is the hook that gets so many consumers caught up paying just the finance fee, just so they can get by. And that's how payday lenders thrive, and make very substantial profits.
Why would anyone take out this type of destructive, financially dangerous form of credit? In a word, it's desperation. There are many millions of American families that are on the brink when it comes to paying bills, buying medicine, buying food, making the mortgage payment, making the car payment, making the phone bill payment, getting the water bill paid, keeping the lights on, you get the idea. These once common, and rather simple elements of being an American are now quite difficult for a large percentage of our society.
Who are these tribal payday loan companies that provide these rather useless and sometimes dangerous lending products? Some of the biggest providers are listed below...
- 500 Fast Cash, a popular tribal payday lender that's been around for a long time
- United Cash Loans, a company that has some level of affiliation with 500 Fast Cash
- Kashia Lending, a relatively new lender that offers small payday loans
- Boulevard Cash, a tribal lender with an old, somewhat disorganized website
- Cash Advance Now, a tribal loan shop where their name sums up everything
- Castle Payday, very typical and quite popular Native American firm
- Get Instant Loan, a low dollar lender with a messy website
- GreenCorp Cash, a tribal payday lender with a very professional website
- Green Gate Services, a very large, fast growing online lender
- Greenline Loans, a tribally-affiliated lender that used to be called Spot On Loans
- My Payday Advance, just another basic small dollar provider
- My Quick Funds, this tribal lender doesn't have a very promising website
- My Next Paycheck, at least this company is honest about what they are after
- My Cash Advance, nothing left to the imagination here with this group
- My Back Wallet, again here we have the company admitting to their desire
- National Payday Loan, this company wins the award for poorly designed site
- My Snap Credit, and sometimes you will find them just referenced as Snap Credit
- Payday Loan Pros, this company is usually referenced to as PDL Pros
- Payday City, another useless payday lending company
- Ripple Cash, very typical loan program with basic requirements and small loans
- Sovereign Advance, a reminder that tribal lenders don't bother with state laws
- Splash Cash Advance, a Native American firm with a surprising number of customers
- Target Cash Now, no they don't have anything to do with the Target Corporation
- Tribal Advance, actually this is just a loan matching service not a true lender
- Your Fast Payday, no doubt it will become the tribal companies payday too
- CashAdvance.com, a large site that is in fact a tribally-related lender
- Black Bear Advance, a growing Native American payday loan provider
- Big Sky Cash, a tribal lender that recently went out of business
- Lakota Cash, this is an average 30% bi-weekly
These are all Native American lenders that specialize in short-term lending, payday loans that are due at the end of two weeks, or in a few cases at the end of 30 days, but either way the technique is the same. It's going to be hard to repay both the fee and the original loan amount so the hope is you (the consumer) will roll the loan over and keep the process going with bi-weekly payments continuing for months.
Most of the above companies will follow the almost industry expected and quasi-adopted formula which is 30% finance fee for every 14 days the funds are borrowed (and outstanding) for a loan amount ranging from $500 to $1,000.
The loans can almost always be rolled over, in fact some of the above companies will automatically roll the loan over unless you specifically contact them to repay the full amount due on the debt. They've got this business down to a science.
Even the part of the business where they take the money out of your checking account is down to a science. Most people get paid every other Friday. When you take out one of these tribal payday loans you provide a written consent (a written authorization) for these lenders to utilize an electronic transaction called an ACH, which stands for automated clearing house, which is a simple transaction that can be used without any checks being written.
These repayments are usually scheduled to come out of the customer's checking account immediately after midnight to 2am of the early morning on that Friday (pay date) for the customer. By the time the customer wakes up to go to work the deduction has long since been taken out of their checking account.
Everything about these companies is pretty much not effective, helpful or useful in the course of living your financial life. I didn't include all tribal payday lenders however, one that I do like is a company called RadiantCash which has a unique program for lowering the costs of repeat customers.
Each time a customer takes out a RadiantCash loan and successfully repays that loan it triggers a lowering of the interest rate on the next loan they take out. The loans keep getting cheaper until the customer gets to their 11th loan which then charges only 1.5% every two weeks. So a $1,000 loan would only charge $15 as a finance fee for that time frame. That's amazingly low for any tribal lender and I thought it was a very inventive and worthwhile program especially for consumers who are constantly getting into and out of debt.
This is the kind of rewarding, consumer conscious lending practice that I would hope other Native American lenders would follow. After all aren't the tribal lenders free to do exactly as they see fit? It's interesting that the huge majority of tribally organized lenders are free to do as they wish with their full legal sovereignty and yet they mostly choose to mimic one another by providing very low quality, consumer damaging loan products that have no creativity at all.
If you have to get a loan, and you can't qualify for any traditional sources, then it is time to turn to Native American lenders. But I personally will turn to the installment loan providers first, such as Mobiloans, Plain Green Loans, Great Plains Lending, Clear Creek Lending, Spotloan, Superior Funding and American Credit Line. These tribal lenders are better for me (and they seem to make more sense) than the extremely short nature of the payday loan. And if you do want to or need to go with a payday lender then take a look at RadiantCash as they will at least make future business a much more viable option.
Try to think about the economics of your choice in loan provider because getting any loan will cause a reaction to your way of life, it's just that you want to minimize that reaction as much as possible.