Most of the time at this site has been devoted to Native American lending. There are over 100 active tribal loan companies, and probably at least 20 firms that have gone out of business, merged into other tribal loan outfits, or that have just simply vanished. Native American lenders don't tend to issue press releases and then generally are not very open when it comes to how they conduct their business.
That's not too surprising because their loan operations have come under a high degree of scrutiny in the last two years, and not just from the public (consumers) but also from the federal and state financial regulators. So it's not that unusual for the firms to try to essentially lay low, and while they are still actively engaged in marketing they're also trying to not be the topic of discussion.
That's the same type of situation we see when we look at the state licensed loan stores that dot the landscape. Some of these loan stores are of a more upscale presence, like Springleaf Financial or OneMain Financial. At the same time both of these entities have changed their corporate name (and their branded image) over the course of the last three years. They don't want customers to look into or research their past, their legacy operations or how they conduct business today. But just like the tribal lenders they are very active when it comes to marketing online and trying to advertise the concise message to a certain (potential customer) segment of society.
As an aside, if you want to learn more about these upscale (and other) physical (brick and mortar) loan stores you can go here to find more in depth discussions and analysis on a case by case basis.
Then there are a bunch of other loan stores that are not considered of an upscale quality. These companies are often looked at with a degree of ridicule. The traditional brick and mortar loan stores are those like the Cash Store which is large chain of lending store that is found in the Midwestern states.
This type of loan store takes on a character of legitimacy but when you are done filling out the paperwork you realize they are providing a decent amount of cash (usually between $600 to $1,400) but they are charging monstrously high interest rates. And their level of legitimacy tends to suffer somewhat because their physical stores are not too often of a high caliber.
For instance some of these loan stores will take over small buildings that were once restaurants, which gives them a sense of short-term operators. You just get the feeling the company could be there one day and just vanish the following day.
There are also thousands of loan stores that can be classified as title loan operators, or sometimes referenced as title lenders. This large batch of companies can be found coast to coast, and yet they have a surprisingly small presence online. This is a more face to face business, where the lender is actually taking inventory of one of your assets, usually that asset is your car or truck.
These loan stores need to have a brick and mortar facility in order to take possession of your car title (as in physically take custody of it for the duration of the loan) and then you are usually provided a check, or sometimes cash on the spot.
While these companies are very common, especially in economically challenged neighborhoods, they are not the focus of this site because they are engaged in a form of loan that is collateralized. Yes, these are still short-term loans and yes, millions of people use this form of credit every year.
However, since an asset has to be handed over during the life of the loan they are just not what I would consider a true loan. This form of lending is more akin to the pawn shop business, where an asset is provided while the loan is in place. Since it's guaranteed by the borrower it just doesn't fit the description of what I would define as a loan.
Speaking of not fitting the definition of a loan, that leads in to our last and by far most common lending store anywhere in the country. That would be the infamous payday loan store, the loan store that you'll find in so many thousands of strip malls across the country.
Why do these companies almost always seem to choose strip malls to operate out of? It's most likely because they want to blend in. Just like the title loan shops, the upper scale loan stores, and the mid-level operators, the payday lenders want to market to their potential clients heavily but blend into the background as far as the general perception. This is why you'll spot them amongst the Chinese takeout restaurant and the pizza parlor in the strip mall.
These loan firms are the least among all the lenders. It's very hard for me to even qualify what these companies do as a loan. Think about the average payday loan, which can run from 10 to 16 days. So from the time you get the loan until when you are required to repay the loan is something like 300 hours.
That's not a very long time when you think of what a loan traditionally meant. Home mortgages are 15 or 30 years. The personal loans that a bank used to issue would stretch from three to six years. The concept of just getting a loan for a few days just doesn't do much me.
This is why I often make little distinction between the tribal payday loan shops and the non-tribal payday lenders, since they both operate with essentially the exact same format. The only difference you will find will be in the interest rates the firms charge their customers and beyond that it's an identical business model.
So there are some alternatives to tribal lending. Let's narrow them down here, with the only ones that truly matter being Springleaf Financial and OneMain. These "better" lenders have much lower interest rates from tribal lenders, as they will charge anywhere from 16% to 24% APR on their loans. But that's much better than the 200% to 800% APR you can face with a tribal lender. If you have some decent credit and no outstanding (late) bills or debts, then you might want to start with Springleaf Financial as a possible source for your next loan.
Recent Comments