PLAIN GREEN LOANS COMPLAINTS GROWING

Another day and yet more complaints about a Native American lender.  This time the complaints are rolling in from not just your average forum but from an article in HuffPost.  It seems the heat is going to keep getting turned up by those who want to shut down tribal lending.  You can see the HuffPost article here, it's basically the same diatribe about how the tribes get to charge whatever interest rate they feel like.

First, a little bit of story behind this whole situation.  As the article points out, 42 states and the District of Columbia have made laws and regulations that have put big limits on short-term lenders.  In many states this is closing down a lot of payday and installment lenders.  Why?  Because the unsecured nature of these high risk loans put the lending firms in huge jeopardy.  For instance, a number of states are limiting the interest rates to a 36% annualized rate that can be charged for a loan.  Now, here's the caveat - of course this is a very high interest rate, one that wouldn't even have been legal in the United States 50 years ago. 

We get that, alright, just for the record we all have comprehension of that (very salient) fact.  But many things have changed from 1960 and one of those big changes is that people walk away from their debts.  They walk away from their obligations.  It's not that uncommon these days to default on a loan, a car note, even a mortgage as we've seen on a large scale in the last six years.  And it's not really the fault of the borrowers, at least not often.  Most borrowers have struggled mightily through the savage collapse of the world economy since the middle of 2006.  That's when housing prices topped out and started to roll over.  And we've been rolling into the financial abyss since.

Plain Green Loans knows this and they have stepped into the breach left by all the other lenders, and those other lenders are gone, make no mistake about that.  Let's look at who still lends money....and that would be almost nobody.  The traditional banks just do not lend except to well financed people that want to buy a house or refinance a home, along with a few businesses.  The concept of them making a personal (unsecured) loan?  Out of the question.  What about credit unions?  They're still around but they might as well not be.  They might help with a house or car purchase but forget a signature loan.  What about bigger, more reputable loan shops like Springleaf and OneMain Financial with their brick and mortar loan stores?  Only for the top 25% of society, the other 75% can hit the road.  What about peer to peer lenders like Prosper and Lending Club?  Again, only for the top 40% of society, everybody below that rung can just drop dead as far as they're concerned.

So what are we left with?  The standard issue garbage payday loan stores that are everywhere in strip malls and all over the internet, and the roughly 100 tribal loan companies.  That's it.  Western Sky drew a lot of criticism (some of it very deserved) as the top tribal loan shop but they're done.  I guess the plan now is that it's time to move against the next largest Native American lenders.  And that's Plain Green Loans, along with a few others like Mobiloans and Great Plains Lending.  Perhaps the plan is to badger and legally come after all of these companies until there are none left.  Journalists are very quick to point out the disasters left in the wake of the 2008 Financial Crisis and all the surrounding economic problems that came from that time.  But does anyone look at the situation from the viewpoint of the lenders?

Yes, the situation for the borrower / consumer has been atrocious.  The main complaint about Plain Green Loans is the interest rates (finance charges) which can stretch to over 360%.  The article at HuffPost talks about some borrower who took out a $600 loan and ultimately had to pay over $1,200.  That's not good, but that's where the lending market has gotten (fallen) to at this point.  Time to wake up and realize that there are actually much worse interest rates out there if you pay attention to the number of tribal payday loan companies that are charging much more than Plain Green Loans.  Those loan amounts at the payday shop don't appear as bad on the surface because it is for a supposed short-term time period.  But those "payday" loans often get rolled over again and again by the borrowers, with no complaints coming from the payday lender.  Each time the loan is rolled over the tribal lender gets another finance fee.  In practice and in reality, the payday shops are a worse proposition than the installment lenders like Mobiloans, Plain Green Loans, and Clear Creek Lending.  If you really want to see some high rates being charged (very quietly) go look at all payday loan companies (both tribal and non-tribal) that allow loan rollovers.

It's important to look at the market that borrowers face because of the financial catastrophe.  Paying enormous interest rates and finance fees only makes the life of a middle class family all that much more difficult.  At the same time let's look at the same financial proposition, only this time from the view of the lender.  What is a company like Plain Green Loans supposed to do when they loan out 500 loans and 140 of those lenders default on their loan.  Not just the finance fees, but the principal of the loan.  What recourse does Plain Green Loans have?  They can call the person a bunch of times, assuming the phone number still works.  They can send a bunch of letters for all the good that does.  They can hire a collection agent to harass the customer or make empty threats.  The firm can sell the bad loan for pennies on the dollar to the collection agent.  Beyond that what ability does Plain Green Loans have to make up the losses from bad loans?  Nothing, the company has no ability to come after the borrower.

Plain Green Loans does charge high interest rates and it's not fair.  But the situation that company is unfair, just as the focus of our society has been unfair.  Why do the 10 top banks and brokers get all the focus of society?  Why are consumers in the permanent disaster state that they are in?  Are we sure that Plain Green Loans is truly gouging consumers or does a lot of the money they make in finance fees actually get used to cover losses from loans that were never repaid? 

I understand that HuffPost wants to position themselves as a consumer advocate and that high interest do hurt (unwary) customers.  However, my question that stems from that situation is what are (would-be) borrowers supposed to do once all of the loans in the country are capped and then many of the lenders exit the market altogether?  If you are employed by AOL and sitting pretty with a 401k, health benefits, decent income, and a bonus once in awhile, well it's going to be a lot easier to say if the companies can't lend at a lower interest rate well then they shouldn't be lending at all.  That's not going to help the person who is stuck in a jam and needs money in the next 24 hours.  That journalist writing about how bad the interest rates are will be heading to their home to have dinner and go to bed, they aren't going to be in the trenches with those that have been left with no borrowing alternatives.

Now could Plain Green Loans charge a lower fee?  Yes, and they should.  The 360% interest rate is too high.  By the way, there are some tribal lenders out there who charge 695% APR so don't be too fast to run after Plain Green.  That notwithstanding there is no reason Plain Green Loans couldn't make some gesture or effort to alleviate their customers problems by dropping that fee in half.  180% is still one hell of a interest charge. 

No matter what the company charges in interest the fact remains that they suffer from a very high rate of borrowers who simply walk away from their loan obligation.  They pocket the money and Plain Green Loans is left holding the bag.  A lot of those high interest payments go towards that bad debt account.

Then there is the final note, which is the same argument the company is constantly making about sovereignty.  The fact is that Native American lenders have the right to conduct their business out of their lands and there is nothing the government can do about it.  The word sovereign is just that, and making loans is a legal enterprise in the U.S.  If the banks can get bailed out to the amount of trillions of dollars then tribal lenders can make a high interest loan if they want to.  Period.  When the unfairness of the banking problem, where banks get taxpayer dollars and refuse to make loans to 80% of the population gets solved, then you can come bellyaching about the tribal loans.

Until then Plain Green Loans gets to keep making their loans, at their posted (legal) sovereign nation interest rate.

Comments

[Charis]

Valuable info. Fortunate me I discovered your web site accidentally, and I'm shocked why this coincidence did not came about earlier! I bookmarked it.

[personal loans with bad credit]

I told my brother to check out this website because he is all kinds of financial trouble, both with these tribe loans and with a bunch of credit cards. He needs to learn a few things about finance.

[Short Loans Hurt]

I can't stress enough that if you go with Plain Green you will be better off than the paycheck style loans. Not kidding.

[tankless water heater]

Goodd post. I'm facing some of these issues as well..

[Cathy L. Fisher]

The customer service is terrible, I have had to call over times just to get my payment corrected. I have gotten nowhere and as soon as I pay this off, I will definetly no longer deal with them. Worst site ever. Thumbs down.

[7T2]

I am just paying off a loan from PGL. I know that their interest rates are extremely high, but several times when I really needed money, they were the only ones I could turn to. I generally pay my loans off early, so my interest paid is less. My point is that this company helps more people than they hurt and without companies like them, a lot of people would really be without any viable options. Plus the payments are stretched out over months instead of weeks, so you have more time to get yourself together.
I think that the mainline lending institutions could do more to help people in financial stress, but since they don't I'm happy to have companies like Plain Green Loans. My situation has improved, but I would not hesitate to use PGL again, especially for a quick turnaround or emergency type loan.

[Regina Clements]

Plain Green will just plain steal your money. Even one day late means you are going to face a penalty and they will not negotiate or even talk to you. Try it and be regretful that you did. I will never do business with this company again and I can't impress on you that you should not either.