Something big is happening in the world of Native American lending but no one is talking about it. And it's not one of those things that is real obvious. This definitely falls under the cover of subtle moves, it's a business decision that is being implemented but there are no press releases, no one in social media is talking about it and frankly nobody sees what is slowly unfolding.
The tribal lenders that operate payday loans and the tribal lenders that have installment lending formats are merging their two business models into a hybrid version of a loan. And this new merged, hybrid tribal loan service is slowly but surely taking becoming the most popular loan format among the Native American loan companies. It's not sweeping over all of the firms but it's showing up with certain lenders, especially Greenline Loans.
There are many tribally-based lenders who are using this new merged loan product, but Greenline is leading the way. In a sense Spotloan has been doing this for quite some time because they have offered their upper loan limit of $800 for at least three years and they always structure their loans in the installment loan format. But now things are getting even more reduced because there are more than a few tribal lenders who are only offering $500 and a few that are only offering $300 in the installment loan structure.
In these cases the lenders have almost completely reduced their risk down to nothing and they are just hoping that the customers will be so broke that they will be tempted, stuck, trapped, lazy, unable or just unwilling to repay the $500 principal amount on those small loans.
When a customer is presented with a bunch of scheduled payment dates that all are relatively small when compared to repaying the full amount of the loan there will be many folks who just opt to pay the minimum due for that payment period. And this is where the Native American lenders who have moved to this hybrid payday installment loan service will make their huge money and at the same time have very little exposure to suffering a big loss.
Companies like Plain Green Loans and Great Plains Lending are much better tribal lenders but let's acknowledge the truth, which is they are taking on more risk by issuing a $3K loan to an individual. If that individual decides they don't want to repay or they get sick or lose their job, well that's going to be a (potentially) substantial loss for the installment lender.
Incidentally, this new loan format is taking place while another big change is going on in the tribal loan industry at the same time. And once again we see Greenline Loans as one of the leaders of this change. When you go to the information page for Greenline it lists debit card repayments as an acceptable form of paying the loan.
This is a subtle change and the surface it doesn't look like any kind of spectacular change but within the business of tribal lending this is a big deal because the ACH (automated clearing house) transactions via the banking system has been the one and only way to pay (and get loans funded) through these online lenders.
Overall, it looks as though the tribes are not very interested in risking much money on their highly speculative loans to people with bad credit. Or in many instances let's call that no credit or terrible credit.
The problem with not doing any type of credit check (which almost no tribal lender bothers with) is that these firms will be doing business with lots of high credit risk borrowers and that means a lot of them will only make a half-hearted attempt to repay the money and some will just flatly not repay the loan.
What we see with the reduction of the installment loan dollar amount, and the absorption of the installment loan time frame into the payday loan dollar amount is the restructuring of the tribal lending business. It hasn't come to all the tribal lenders to be sure, there are still plenty offering traditional installment loans with higher dollar amounts, but this hybrid loan service (payday done in the installment format) is spreading and it is most likely going to become the dominant tribal loan product in the next year.
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