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Tribal Loans – Must Read Before Applying!

Tribal loans are similar to payday loans but payable in installments and with potentially higher APRs
thadues
Author: thadues
Last Updated: March 27, 2020

Tribal Loans - Must...There has been a lot of talk and comparison between payday loans and tribal loans. Currently, many states have banned payday loans through strict regulations; and with good reason; their APRs are sky high. Many borrowers and experts consequently look towards tribal loans for bad credit loans when they are in a financial fix. As we shall learn in this piece, tribal loans also come with high APRs plus additional fees in some special cases.

And even though not every state has embraced tribal loans yet, they are getting popular by the day and are quite convenient if;

  • You need a short term loan to fix a financial emergency
  • You have a bad credit score and cannot secure money through conventional financial institutions

Before you jump into avoiding them like the plague, it’s important to learn everything about them. Below is the outline of what a tribal loan is, the interest rate, fees and whether it is a good option for you or not.

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    What is a tribal loan?

    Tribal Loans - Must...

    A tribal loan is a form of a quick short-term loan that is commonly known as an installment loan. Native American lenders give the loan and it only operates within the confines of tribal reservation laws.

    Now, a tribal loan transaction can only take place in sovereign tribal states where the federal and financial agencies don’t have jurisdiction. In American history, Indian tribes have always been considered sovereign nations. Today, there are over 500 Indian tribe nations. And given that they are sovereign, they can create their financial regulations without succumbing to the pressure of following state laws. This is how they can offer loans and operate in states where payday loans are illegal.

    It’s important to note that though the tribal lenders are part of a Native American tribe, the borrowers outside their region do not need to be part of the tribe. This means you can apply for a loan if a tribe lender operates in your state.

    Note: We cannot talk about tribal loans without mentioning the NAFSA (Native American Financial Association). This association was formed in 2012 to represent the said tribes as they provide installment loans.

    Payday loans vs. tribal loans

    It’s no secret; most borrowers don’t know the difference between payday lending and tribal lending. To many of them, the two are the same, but this isn’t the case. Tribal loans are more like installment loans. They have a lot in common with installment loans than with payday loans. And though their APR is high, at times even higher than that of payday loans, they have flexible repayment plans which make them a better option for borrowers who are coming out of a financial emergency.

    In terms of structure, tribal loans are like conventional loans. The borrower pays a small portion of the money they borrow plus the interest on the loan amount over a specified period. This offers flexibility and makes it easier for the borrower to repay the loan. With payday loans, borrowers are required to repay the loan in a lump sum and a shorter period.

    Tribal loan amounts range between $500 and $2000 and have a loan term of between six and twenty-four months depending on the lender and the loan amount. New borrowers start with a lower loan limit but get an increase after subsequent successful repayments. Unlike payday loans, the increments don’t attract rollover fees.

    If you think about it, though payday loans help some people, they are not structured to help borrowers to dig themselves out of their financial crisis. Instead, their strict rules, high APRs, and short loan terms pay a big part in crippling borrowers and trapping them in a vicious debt cycle.

    Note: Tribal loans have high APRs courtesy of additional fees. And the fact that federal or state laws don’t regulate them means that they can go as high as they please.

    Tribal Loan Requirements

    For you to access a tribal loan, you need to meet some pre-requisite requirements. The requirements vary from one creditor to the next. Because of the variations, and this is standard with payday loans as well, you should always do your due diligence on tribal lenders to make sure you get a fair deal. Now, most borrowers demand that you be over 18 years and also have some employment and income restrictions.  Some of the qualifications include:

    • You should have a driver’s license
    • You should have an active bank account
    • You should provide details of your annual or monthly income
    • You should provide the status of your employment

    What is the maximum loan amount you can get from tribal lenders?

    Most short term installment loans have minimum loan amounts you can borrow, usually $500. However, some lenders offer loan amounts lower than this. The maximum amount varies depending on a couple of factors, including the lender and whether it is your first loan or subsequent loan with the lender. Some lenders only offer $1,000 and others go as high as $2,000.

    Always remember that the higher the loan amount, the higher the cost (APR). Always make sure you review this information before you take the loan.

    How safe is a tribal loan?

    Installment loans facilitated by registered tribal lenders are safe, but this doesn’t mean that you’ll qualify for all or get a similar loan amount like those with a high credit score rating. To be sure of your safety, you should always make sure the tribal lender is registered with the Native American Financial Association.

    Though they are sovereign, the Tribal lenders under the NAFSA follow consumer rules that take care of borrower interests. As you plan to take a loan from a tribal lender, you should;

    • Get information on the payment plans
    • Know the amount of every installment
    • Now the payment options available
    • The APR arrived at from the loan term
    • The proper channels you can express your disputes and complaints in case you have any
    Note: The government has no authority over tribal lenders that you can rely on if you have disputes. This is why you should be smart and careful with tribal loans.

    Pros of Tribal Loans:

    When you are in a tight fix, short term installment loans are perfect. Even with poor credit rating, you can have your loan approved, which is not the case with traditional lenders, including banks.

    But aside from emergency loans, below are other benefits:

    • Fast funding – with a conventional financial institution, you will have to wait a couple of days is not weeks before you get the money. However, with tribal loans, you can have the cash in your account on the following business day. Occasionally, it can be two days max depending on if you offer all relevant documentation and when you complete the application form.
    • They accept borrowers with poor credit – if you do not qualify for a loan from the bank, a tribal lender is your next best option. But even with this ‘luxury,’ you shouldn’t apply for a loan amount you know you cannot afford to pay back. Failure to repay loans is what earns borrowers a bad credit rating to begin with. You should, therefore, ensure you can afford the installments.
    • Online loan application – unlike traditional loans, tribal loans can be applied online, so you don’t have to wait in long lines. Provided you have a laptop or a phone with a stable internet connection, you can complete an application form and submit copies of relevant documentation.

    Cons of Tribal Loans:

    • High APRs – the APRs can go as high as 700%. This is possible because state and financial lending laws do not govern tribal loans.
    • The loan has to be repaid in six months and the repayment installments are fixed—failure to adhere to the laws warrants a fee.
    • It’s not available in all states – though they claim to be accessible to everyone, they are not since they aren’t operational in all states. This can be a setback for those living in states not covered by the tribal lender.

    Who can you trust?

    With the number of tribal lenders in the US, trust is a sloid concern among borrowers. As you make a choice, you should have your eyes open. Phony lenders pop up every other day with the promise to give you great loans without pressuring you to pay it back, but not long after you’ve taken the loan, they employ sneaky maneuvers and eventually leave you deep in debt.

    And though some are trustworthy, you can never be too sure. To ensure you find a great tribal lender, you will have to read through reviews. In the 21st century, more and more borrowers are leaving their testimonials and reviews about the experience they had with particular tribal lenders. Going through the said reviews will provide you with a good idea of the company you are about to go into business with, their loan terms, requirements and how they treat their clients. The reviews will also go a long way in helping you to get rid of an imposter because some of them are just regular same day loan lenders trying to hide from government lending regulations.

    Below is a checklist that can help you make the right pick.

    • Make sure the lender has an SSL certificate

    Each time you apply for a tribal loan through a website, the first thing you should do is ensure that they have legal SSL certification incorporated to safeguard your details from hackers. If you cannot find the SSL, stay away from the tribal lender.

    • Go through the loan terms carefully

    Every time you check a review from a past borrower or an expert, be sure to do your homework and confirm the accuracy of the data presented.

    • Check the lender reviews by third party sites like this one

    This is important too, but while you are at it, you should be realistic. You will get some negative reviews amidst the positive one, but a few negative reviews are not a reason for you to turn your back on a company. If anything, it shows that the company is on the right track. Any company without a negative review is too good to be true and most likely has something to hide. Why? Well, it’s impossible to please everyone, and if we are honest, some borrowers are hard to please. You can get other reviews like these from Google, Facebook, and Trustpilot.

    Note: The tribal lender decides the terms of the loan, not you. On the bright side, this is not the reality with all companies. For those that dictate the terms, you will have repayment installments assigned to you automatically and you have to comply. The repayments might be bi-weekly or monthly depending on the company you choose to work with.

    Tribal Installment Loans for Bad Credit

    As we’ve already mentioned, tribal loans for bad credit are a great option, but you need to be careful with the terms of the loans. Speaking of bad credit loans, you should bear in mind that some tribal lenders have a cap on how low they can go with the bad credit offer. This means that it’s up to you to find a tribal lender that accepts your credit score.

    Luckily for you, we have taken the liberty of doing the homework for you. Most of the tribal lenders you will come across on this platform conduct soft credit checks which means they consider what you fill in your application and your faithfulness to repayment or lack thereof doesn’t affect future credit score ratings. Some of the main tribal lenders include Arrowed Advance, Lendgreen, and Blue Trust loans.

    Direct Tribal lenders

    The reason we’ve added the term ‘direct’ is so that we can have a distinction between companies that give the loans and those that have a database of tribal lenders and grant you access to them upon application. With direct lenders, all you need is to fill out a form on the official website, and you are good to go. The verification process doesn’t take long, provided you have all the necessary documentation in hand.

    Where do you get the tribal lenders?

    A quick search on Goggle will give you a list of all tribal lenders that operate in your state. You can get some general information on the loan amounts, but some will not expose their APRs until you have submitted your application form.

    Even with the uncertainties below are some of the top tribal lenders you can consider.

    Blue Trust

    Here are some facts about Blue Trust;

    • They can provide a maximum of $2,500
    • They have six-month loan terms for new customers. The term can be longer if you are a returning borrower.
    • The maximum APR varies
    • It has a fast turnaround time; usually the next business day

    SWIFT payday loans

    SWIFT offers various types of loans, including direct lender tribal loans. The maximum loan amount for newcomers is $1,000 and $1,300 for return clients. Though this varies depending on the lender, they match you with.

    The facts of SWIFT tribal loans include;

    • The loan conditions vary because lenders are different
    • It has a 24 hour turnaround time
    • The APR varies depending on the state you are in and the lender

    Lendgreen

    It offers tribal loans within Lac du Flambeau (its jurisdiction).

    The facts of this lender include:

    • It offers a maximum of $400 to newcomers and a maximum of $1,000 for return borrowers
    • The loan term is usually 18 months
    • The APR is capped at 795%

    Before Taking out Tribal Loans

    Tribal loans are easy to access. However, their high-interest rates and charges could leave you in a pit of debt. In some cases, you might be tempted to take multiple tribal loans. While this might fix your problem at the time, in the long run, it does more harm than good.

    So before applying for a tribal loan, below are some alternatives to consider.

    • Local resources – local charities, non-profit, and federal agencies provide financial help including rent, food, and utilities to those who need them.
    • Side jobs – with the internet, the possibilities of side hassles are endless. For instance, you can get a writing account and write articles for websites and earn a decent amount weekly. Alternatively, you could sell items you no longer need on eBay or other websites and use the money to solve your problems.
    • Payment extension – if you approach your service provider for an extension of the payment date, chances are they will agree to it, provided you do your best to honor the new agreement.
    • Banks – this is an alternative you can explore, but it should be your last resort. To explore this option, you will need a good credit score and a stable job. And when you get it, make sure you pay it off on time.

    Verdict

    Tribal loans represent flexible loan options. They are indeed costly but on the flip side, they are great for those with bad credit scores and who are in financial emergencies.

    But even then, you should bear in mind there are many scam artists on the internet. To stay safe, you should go through the loan documents and do your due diligence before signing a loan contract with any lender.

    Always know the hidden fees the loan has and the APR. And most importantly, make sure NAFSA backs the lender.

    FAQ

    How old should I be to get a tribal loan?

    All tribal lenders have a minimum age requirement of 18 years. For a few, it’s 19 years because of state regulations.

    What is the APR for a tribal loan?

    Tribal loans are expensive. At the moment, the APRs fall between 35% and 1500%. The rate you are charged will depend on your financial and credit situation. Some lenders tend to have reward systems for repeat borrowers. And if you prove faithful in your repayments, your next loan will be at a lower APR.

    What happens if I cannot repay the loan?

    There are a couple of things that will happen. First, the tribal lender will try and reduce the debt by withdrawing funds from your bank. This means that you’ll end up with overdraft fees and the collection agencies will eventually come knocking. If possible, you should try borrowing some cash from friends and family to repay the loan. The longer you have the loan, the more it costs you.

    Is it possible to negotiate a tribal loan debt?

    If you ever find yourself in a situation you cannot repay a tribal loan on time, here is what you should do. First, call or send an email to customer support informing them of the troubles you are going through. They will not forgive the loan, but they will work with you to come up with a better way to resolve the problem, either by skipping a payment or breaking the payments into even smaller repayments.

    Should I have a checking account to get a tribal loan?

    Yes, you do. Every tribal lender requires that you have an active bank account where they can send the loan amount. Depositing money into your bank account is a fast and safe method of giving you the loan. But before you provide personal information, ensure the lender's application form and website has SSL protection.

    Are Tribal Loans safe?

    Yes, they are. They have a privacy policy which means they aren’t allowed to share your information with third-party companies. But on the other hand, the high-interest rates make them a great risk. Make sure you can afford the loan before signing off on anything.

    Can I get into trouble for borrowing from a tribal lender?

    No, you cannot. So far, no borrow has been charged. Actually, tribal lenders have been taken to court for having rules and regulations.

    What does it mean that tribal lenders are sovereign?

    It means that the tribal lenders can make their laws. Their sovereignty allows them to charge high APR (above the state caps).

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    thadues

    Thadeus Geodfrey has been a contract writer for Lernbonds since 2019. As a fulltime investment writer, Thadeus oversees much of the personal-finance and investment-planning content published daily on this site. With a background as an iGaming expert and independent financial consultant, Thadeus’s articles are based on years of experience from all angles of the financial world.

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