Here's what should be a relatively simple question...
Where do tribal loans come from? How did this whole business get started and why did Native Americans get so involved in providing short-term loans?
These are legitimate questions that not many people are interested in, or willing to try to explain. But isn't strange that for all the business resources and complex nature of American finance that it doesn't seem able to provide much in the way of short-term financing for people who need small levels of debt to get through small blocks of time?
We're not talking about a 30 year mortgage here, or a car note that stretches out over 60 months. This isn't a discussion about the traditional personal loan that lasts three to five years and gets repaid in one (or two) big lump sum repayments. This is not a conversation about getting a credit card, or credit card interest rates or the credit limit on the average credit card.
Some consumers need very short-term loans that range anywhere from seven days to 120 days. They need to pay an electric bill to keep the lights on with a disconnection pending within days, or they want to buy their boyfriend a birthday present but their payday falls just beyond the calendar date of that birthday so they effectively want to get paid a few days before they normally get paid. Maybe the consumer wants to get their car out of an impound lot or it might be that they got into debt with a friend and they really want to repay the friend, and they would rather owe money to a company that keep borrowing from that friend. The same situation could apply with a family member. There are hundreds of reasons why people need and/or want to get immediate financing on a short-term basis.
The catch is that there are no good sources for that borrowing. There are two situations taking place at the same time here.
First, all of the lenders in this field have fallen into a classification of company that simply does not trust, believe in or respect their customers. These short-term lenders are very interested in making a lot of money off of their customers, and they are hugely interested in managing their customers.
In fact, let's call it what it is, they micro-manage their customers. The number of rules, stipulations, demands, requirements, regulations and legal jargon that are enforced on short-term borrowers in the United States is huge. These rules are written in stone, there is a very tight format for how, when and under what circumstances any loan will issued. The level of control and management is fierce, unending and to my way of thinking quite disrespectful. The rules of what will happen if a customer doesn't repay are spelled out in no uncertain terms.
Like a prisoner, slave or indentured servant, the future of someone taking out a payday loan (or an installment loan) has figurative iron cuffs that are placed on them. The only difference is that a modern day borrower does have a choice to not go into debt, but beyond that there's little difference, because once they sign on the dotted line, they (the customer) are going to be treated like a financial slave.
Let's assume that a person does decide to take a tribal loan, and that's not a stretch because thousands of Americans are signing for these loans each business day. Where do they come from? Where do the loans actually originate from? Native American loans come from dozens of different tribes that are scattered all across the country. Some of the tribes are based in California, Arizona, Oklahoma, South Dakota, mostly you'll find them in states that are west of the Mississippi River. These tribes often do not have the luxury of operating a large gaming facility, the tendency is for tribes that are east of the Mississippi River to have these type of operations.
The tribes that issue loans often get funding for their loans (the wholesale dollars they borrow in large amounts to in turn lend out at the retail level at much higher interest rates) from private equity funds. These private sources of capital make it hard to know which company is funding which tribal lending company. But without knowing the proper names of these companies we do know the general format for how they operate.
Tribal lending is an odd business because it is everywhere online when any discussion of short-term or unsecured lending comes up. And they provide millions of loans to millions of customers each year. Yet at the same time there is very little information about these companies, who actually owns them, how much money they make, how long they've been in business or who the managers (or executives) are at any of these companies. That's just how these firms work, they are everywhere in a marketing sense but do not want to discuss or disclose much about who they are as a company.
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