Blue King Loans is a tribal lender, and they're not one of the newer companies, this firm has been around for quite awhile. There hasn't been a lot of reasons to review the company mainly because the financial product they offer is too basic and too uninteresting to pay much attention to.
This dud of a tribal lending operation started back in 2012 and they haven't done much to make a consumer want to partake in their business. But that doesn't mean that Blue King hasn't found a few people who are interested in their loans because they've been busy since they opened the doors in 2012.
Blue King was the subject of an extensive article over at LoanSafe.org nearly two years ago, where they topic was about whether Blue King was actually operating out of a tribal land, how a tribal company gets its financing and whether the entire prospect of Native American lending (under the modern rules) is a legal format to issue loans.
The problem posed by the writer at LoanSafe was that the expanding tribal loan model is going to erode and undermine the existing state licensed lenders. And those state licensed companies are in a competitive disadvantage anyway, having to conform to a variety of state regulations and having to spend millions of dollars in regulatory fees and compliance costs.
By the way, if you want to read the LoanSafe article you can spend the five minutes it takes to read it, you'll see what's taking place. But even if you don't read it, just think about how one company that's burdened with rules, requirements and regulations would do facing a company that is truly operating in an absolute free market environment with no taxation, or regulation, or any guidelines to follow. Of course the company that has the total freedom (and freedom from taxes) will win out in the end.
It's strange that they chose Blue King as a point of conjecture on whether or not tribal loans should be a legal financial product because of all the tribal lenders Blue King is not that popular. They aren't that old either and they just would not be the type of company that lands on the radar when trying to tackle the ever growing tribal lending industry.
Western Sky Financial was the biggest player and they went down in flames in late 2013, thanks to all the regulatory pressure that's been ongoing and the fact that they didn't organize their tribal lending entity charter correctly. But Blue King didn't make this mistake and their business should be fine.
There are two problems I can see going forward for Blue King and they are completely different issues.
The first would be the pressure that the New York Attorney General (and his counterpart in the NY financial regulatory office) keep bringing the heat on the banking industry to discontinue support for tribal lenders like Blue King. Even though tribal lenders are 100% sovereign entities (they technically are considered nations and use that term often when talking about their sovereignty) these lending companies are largely dependent on third party payment methods. And more specifically they are heavily dependent on using the electronic banking transactions involving checking accounts and bank routing numbers at the top 200 commercial banks around the country. These transactions, sometimes referred to as EFT (electronic funds transfers) or ACH (automated clearing house) are the backbone of the modern electronic banking's method for moving funds around easily and quickly in the United States.
A company like Blue King, for all their sovereign status, doesn't have any technology or capability to transfer funds, either cheaply or expensively, they just don't have the option. They are reliant on the banking system for this speedy, safe, low cost and efficient service. It's very convenient for the tribal lenders because it doesn't cost anything to access the electronic banking services if you have the correct (submitted) information from the willing customer.
As the state of New York pressures the large (and medium sized) banks to no longer allow their electronic banking to be available to these high interest tribal lenders it's going to make things much more difficult for a company like Blue King. It's not alright for Blue King to lose access to the electronic banking format because everything will start to slow down and the costs will go up.
It's not essentially for Native American lenders to have access to the banking system but if and when it ever does get to the point where there is a full restriction on tribal lenders from the banks (and it will be the bank's decision, even though behind the scenes it'll be known that New York is behind it) then things will get quite bad for companies like Blue King.
There are other options for paying out loans and collecting repayments, but they are not as convenient, they definitely are not as cheap and they are more time consuming. The matter of convenience is really important as most people have too much going on in life and they don't have time to take part in these other third party payment methods.
What are those other payment methods? Western Union and MoneyGram are the two big wire services, then there are over a dozen electronic payment cards where Green Dot is the biggest of those. All of these third party methods require the time to go to buy the service, because for the most part there needs to be some type of personal interaction.
The borrower (the consumer) needs to buy the Green Dot card and then load the information on the computer, register, fund the card, etc. The same goes for using Western Union or MoneyGram, the borrower has to drive to a location that offers the service and it has to be at a time when that business is open. Then they need to pay the fees which can range from $5 to more than $20 depending on the amount of money being transferred.
The second problem for Blue King, and I happen to think this is an even bigger problem for the firm, is that there are just getting to be too many tribal lenders.
The number of Native American loan companies is projected to grow to as many as 400 and potentially beyond. Blue King doesn't have a big marketing budget, most internet lenders don't have the resources to push their loans. So how does Blue King keep getting new customers as the number of new lenders keep entering the market? Are there going to be that many more struggling workers who have a W-2 paycheck that will be willing, needing and/or able to sign-up for high interest debt? The answer is that I have no idea. But just using common sense would seem to say that the more competitors you put into any market the better chance that the fringe players will start to struggle and potentially fail. Unless Blue King can keep new customers coming in it's hard to see how they will thrive in the future.
The question about Blue King as a lending option, should we use them to get a loan? I don't think so, not for me anyway. There are too many other options, many of which offer better debt products. Mobiloans has a line of credit loan option. Plain Green Loans offers up to $3,000 in a single loan, plus they have much lower rates than Blue King. There just isn't enough of a reason for me to say "yes, let's borrow from Blue King" so I'm going to walk away and say no thanks.
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