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Tribal lending payday loans
Tribal lending companies might accept bad credit, but you might not be protected by US law.
Tribal lending payday loans often promise easy approval and money in your bank account as soon as the next business day. But many claim sovereign immunity from US lending laws. This means that they can charge higher rates than other US-based lenders. It also means you aren’t as protected as you might assume. These lenders should be treated as an absolute last resort.
What is a tribal loan?
A tribal loan is a payday or installment loan from a lender that is owned by by a Native American tribe with headquarters based on tribal land. Because tribal lenders are based out of reservations — sovereign territories — they receive certain protections. This means and don’t have to adhere to the same restrictions as state-based lenders.
Many tribal lenders are represented by the Native American Financial Services Association (NAFSA), which advocates and enables tribes to offer responsible online loans. Some are also members of US-based trade organizations like the Online Lenders Alliance (OLA), which sets industry standards for payday lending. But those that aren’t could engage in practices that are otherwise illegal in the US.
Tribal loans vs. payday loans
Tribal lending payday loans and US-based payday loans work similarly. The main difference is that tribal lenders aren’t subject to state restrictions on payday loans.
Many states cap fees and have limits on interest rates for installment loans. Some ban payday loans altogether. Payday lenders have to follow these rules, which is why they don’t operate in every state. But tribal lenders can charge higher interest rates and fees than legally required — and they often do.
They often have a higher acceptance rate than US-based lenders because they aren’t required to check your ability to repay — though as of July 2020, neither do US-based lenders. This might be attractive if you’re struggling to qualify for a loan. But it also makes it easier to get trapped in a cycle of debt.
Is it safe to take out a tribal loan?
Tribal loans are generally safe, but they’re not cheap. Just like other short-term loans, tribal loans have high fees and quick repayment terms, which makes them notoriously difficult to repay. And because a tribal lender doesn’t have to obey state laws, it can charge interest and fees far beyond the legal limit for other lenders.
So while there are legit options, you should carefully consider the alternatives before committing to a tribal loan.
Where can I get a tribal loan?
While this isn’t a definitive list, here are some of the legit tribal lenders we review:
|Lender||Max loan amount||Loan term|
|Uprova (formerly Silver Cloud Financial)||$1,000 for first time borrowers||Varies|
|Blue Trust Loans||$3,000||Up to 9 months||Learn More|
|Plain Green Loans||$3,000||Varies||Learn More|
|Big Picture Loans||$3,500||4 months to 1.5 years||Learn More|
|Loan at Last||$1,000||Up to 9 months||Learn More|
|Majestic Lake Financial||$1,500||Varies||Learn More|
|Golden Valley lending||$1,000||Up to 5 months||Learn More|
What to watch out for with tribal lenders
- “Rent-a-Tribe” lenders. Tribal lenders sometimes partner with a non-tribal lender to offer payday loans. Often these lenders hide the fact that they’re tribal lenders in the fine print. But both are protected by the tribe’s sovereignty, borrowers who try to sue are often surprised to find they can’t. This practice is often referred to as a “Rent-a-Tribe.”
- High rates and fees. Some tribal lenders take advantage of the fact that they aren’t subject to state laws and charge rates that would be illegal at a US-based lender.
- Fewer legal protection from the US. If a tribal lender overcharges you, doesn’t to cancel automatic payments after you’ve paid off the loan or acts in another way that would be illegal in the US, you can’t sue them. Tribal loans are subject to tribal law, which usually favors the lender.
What happens if I default on a tribal loan?
The consequences for defaulting on a payday loan are the same, regardless of whether your lender is based in a tribe or the US. Your loan is first sent to collections and will likely continue to gain late fees. Your lender might even sue you. In the worst of cases, you might be required to file for bankruptcy.
While defaulting on any loan is bad, it’s not necessarily worse with a tribal lender. Tribal lenders can’t try you in a tribal court for failing to repay a payday loan. All debt collectors must follow US law, regardless of tribal affiliation, according to the Federal Trade Commission (FTC).
How to protect yourself when you have a tribal loan
Due to the high interest rates and the possibility of extra fees, you need to have a solid plan to pay back your debt. Defaulting on your loan could cause more financial stress than you had when you initially applied for the tribal loan.
If you choose to borrow money, read all the fine print and get a clear breakdown of the interest, fees and loan terms. You may also want to compare state-based payday loans to ensure your lender has to follow the regulations your state has put in place to keep you safe.
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Frequently asked questions
Get answers to common questions about tribal lending payday loans.
Can tribal lenders garnish my wages?
Tribal lenders can’t garnish your wages unless they have a US court order. In fact, tribal lenders like Lakota Cash and Big Sky Cash were forced to pay close to $1 million to the FTC after illegally garnish borrower’s wages. If a tribal lender attempts to garnish your wages, you have grounds for a lawsuit.
What does sovereign entity mean?
Sovereign entity means that a tribe creates its own laws. This is especially important when you’re dealing with a loan as tribal lenders can charge much higher interest rates than other short-term lenders.
However, if a tribe states that you can’t sue them through the United States Federal Government, it may not be telling the whole truth. Tribes should have arbitration committees — people who deal with disputes between lenders and consumers. If they don’t, you can take them to a court in the United States.
Where can I find the laws that apply to tribal loan?
You would have to look up the Consumer Financial Services Regulatory codes for the specific tribe that you’re borrowing from.
Do tribal lenders provide loans to all 50 states?
Some do, but not all of them. You can check with the specific lender to find out what is offered and where.
Are payday loans available in my state?
Compare payday loans in your state
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