Let's begin today by making sure there is no confusion here. There is no such company or lender called Native American cash advance. Notice the small 'c' and small 'a' on the 'cash advance' back there. Many people are often using the terminology of cash advance to describe the fact that they're looking for a payday loan. But they are searching with the concept of cash advance in mind.
Since there is zero difference between a cash advance and a payday loan (they are exactly the same loan type) then we can stop using the term Native American cash advance and instead stick with what is really going on which is the Native American payday loan.
There are at least 70 companies that offer this type of service. Some of the most popular of these lenders are American Web Loan, 500 Fast Cash, United Cash Loans, Ameriloan, Advantage Cash Services, and CashAdvance.com to round out the most active lenders. Then there are dozens of new and growing tribal payday lenders such as Blue Frog Cash, Bright Star Cash, Cash Advance Now (not to be confused with the CashAdvance.com) and Golden Valleyl Lending.
The explosion of these Native American cash advance companies is projected to keep growing. One recent professional projection was that the number of tribal payday lending outfits would grow from around 100 active at the time of the study (back in 2013) and that over the coming two years there could be as many as 400 of these tribal lenders.
This is stunning growth for any industry during pretty lackluster economic times such as these in early 2014. Why is the industry growing so fast?
The answer is credit. There is no credit for the lower tiers of income earners in this country. It's not that there is a low level of debt available, there is for all true needs just no credit sources readily available. This is especially true for lending to middle class Americans who are looking for the traditional signature loan (a loan that is not tied to borrowing against a car or a house) are just running into a brick wall.
This is what leads to a situation where people who are actually in search of $5,000 or $10,000 loans are reduced to hunting down small payday loans for $500 and $700, far less of the amount they need and certainly just a stop gap measure on the road to financial ruin.
Why would they be so interested in these small payday loan offerings when they need much more than that?
It's called desperation, where those borrowers are so reduced that they are reaching out for any life line that they see as feasible. Ironically, even when these loans are attained it often sets in motion a greater financial degree of destruction, where the crushed finances of the borrowers are actually more quickly reduced with the tribal payday loan.
In other words, getting (being approved for) the Native American cash advance will be doing more harm than good. It will exacerbate the decline of that family household finances. So even though they received the short-term loan (from one of these many tribal lenders) it quickly (within a couple weeks) brings more losses than if the loan would have never been awarded and issued.
How is this possible? It all gets back to the interest rates that are assigned to these Native American loans. These loans often carry a 30% interest rate for the two weeks that the loan was issued. Sometimes the tribes will charge 25% for the two weeks and a few of these companies charge 35% for the two weeks of the outstanding loans. No matter what the interest rate they are all very debilitating to a borrower who is probably already in a weakened financial state.
That's what has to be understood about the majority of the Native American cash advance loans being advertised, pushed and promulgated across the country. One study found that less than 20% of these loans were being issued to people actually suffering from a financial or life emergency (car repairs, insufficient funds in a checking account, flood damage, etc.) in their lives, but rather were getting the loans as a matter of course for more money to have and spend.
That's a huge mistake on the part of the average borrower of tribal payday loans. Even the tribes themselves, at the bottom or somewhere on their website state that these loans are very interest debt products and that they are a high cost form of debt. But people (Americans) are not making very good decisions as the stats show us the fast growth in these type of loans, not to mention the long-term growth of the tribal payday lending firms, where several hundred new companies are projected to arrive on the scene over the next 700 days.
Borrowers will have many new options to get a small loan (with extremely short-term rates) however the problem is that all of these lenders (that's right, all of them) will have these devastating rates that will be assigned to the loans.
Getting a Native American cash advance can be a helpful short-term financial exercise. But for most borrowers getting a tribal cash advance is going to create a financial burden for most of the customers of these loan shops.
Reality arrives very hard and very quickly when you take on a tribal payday loan, and the data on these companies, the scheduled growth of the industry makes one pause and realize that there are going to be quite a few American households that will be participating in (and most likely struggling with) one of these loans in the coming two years.
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