Just when you thought all of the creative and odd names for tribal lenders were used up, it turns out that's just not true. Now we have a new tribal lender by the name of Iggy Loans, which appears to reference a pig in their title. Their website also has a small image of a pig.
Iggy Loans is part of the Sierra Lending group which has other tribal lending companies as part of their organization. Right now (as of May 2014) Iggy Loans is the newest of the 150 plus tribal lending companies. Every month there are new tribal lenders that arrive in the market and Iggy Loans is quite new, this lender definitely wasn't in business back in 2013.
The question is should we consider Iggy Loans as a legitimate source of short-term debt for the average consumer? The answer, at least in my opinion, is a resounding no we do not want to use this company. Even though they are a brand new firm the owners and operators of Iggy Loans didn't do anything creative with their loan terms. Why these tribal lenders will not use their sovereign rights to put together some type of innovative lending programs is beyond me. One right after the next, the new tribal loan firms fall in line with their predecessors.
Here is the basic problem with Iggy Loans, all of which will be very common to anyone who has studied the recent history of Native American lending.
First, the interest rates charged on the Iggy Loans products are very standard for a tribal lender, which is 30% for every 14 calendar days that the loan is outstanding. This 30% rate is way too high for most people to afford and yet it's the 'standard' interest rate that is used by at least 100 tribal loan companies.
Second, Iggy Loans is a payday lender, or as it is sometimes referred to as a paycheck lender. These loans are issued for roughly 14 days, some of shorter loans are for only 12 days and the longer loans can be as long as 19 days. This incredibly short time frame is the usual format for tribal lenders.
Both of these factors are big negatives for a consumer seeking an unsecured loan. There are a good number of other tribally-based lending firms that offer installment loans or a line of credit, and both of those loan products are superior to the far too common payday loan.
Most consumers who turn to these high interest debt products are already in a bad financial situation. Let's remember that at least half of all Americans are doing quite poorly when it comes to maintaining their financial household. And it's this desperation that leads people to apply for high risk, very expensive debt offerings.
The main problem Iggy Loans has is that they didn't opt for two alternate forms of unsecured lending. The company could have decided to become an installment lender or a lender that provides a line of credit. Both of these products have an extended time frame that makes them a more reasonable (affordable) loan.
These two alternate services are still classified as short-term debt but they aren't as flagrant or difficult to deal with as the extremely short time a consumer has to repay a paycheck loan. Borrowing money for that small of time is barely even a loan, it's such a short window of time, the funds are on their way back to the lender before they could even do much good for the borrower. Yes, it's possible that the car was going to be taken away or the checking account was going to be closed, but for most people that extreme necessity has nothing to do with why they are going into debt. The longer you look at the design, function and utility of a payday loan the more you realize it really has very little usefulness and lots of risk.
Iggy Loans made a mistake when they chose to go with this too simple, too easy path of being a simple payday loan company. Just because the majority of tribal lenders also went down this road doesn't mean it's the right thing to do. And from the consumer side it was not the correct move because now we have another Native American lender, which on the surface would be a good thing and we would have another choice when looking for a loan, but the reality is that this is such a poor (or ridiculously average) choice for going into debt.
Look at tribal lenders that decided to offer installment loans like Plain Green Loans, Great Plains Lending or Spotloan. Also, look at a very solid tribal lender named Mobiloans, as they offer a line of credit up to $1,500. Iggy Loans didn't put much effort into building a company that offered anything new or exciting.
They didn't differentiate themselves in any format of their business, the rates they charge, the amount of time provided to repay the debt or the amount that a customer can borrow. It's all exactly the same format that we are all used to seeing, and that we have all grown very tired of dealing with. If Iggy Loans is smart they will transform their business into a more vibrant loan company that can issue more money, longer time frames to repay and maybe even some creative repayment methods.
Recent Comments