Direct Tribal Loans Are Not Available in Every State
With payday loans, lenders allow you to borrow against your paycheck. And repayment terms usually require you to pay the loan back in full, along with all interest and fees, on your next paycheck. Native American loans, on the other hand, allow flexible installment payments that stretch out 6 months and as long as 2 years. This is a fairly convenient option if you need a larger loan. That said, we recommend that you never borrow more than you need. Remember: the APR associated with short-term installment loans can be ridiculously high. Only borrow what you need!
While tribal loans do have a few advantages, they also have very clear disadvantages. Borrowers with bad credit must be aware of both the advantages and disadvantages in order to make sound financial decisions. You’ve seen the advantages. Now, let’s take a closer look at the disadvantages:
Transparency is a Real Issue
When you’re dealing with alternative lending sources, you should be very careful. Fly-by-night lenders popup every single day, promising you the moon and stars, yet find a way to leave you empty-handed and drowning in debt. That being said, you can’t always be certain that tribal lenders are completely trustworthy. Sometimes, it may https://paydayloansohio.net/cities/creston/ be rather difficult to find reputable lenders – and in these scenarios, you might want to consider reading some reviews. Most of the time, previous users will write about their experience with a certain lender. This way, you will know whether they have the best terms or not. By reading these reviews, you might also be able to steer clear of imposters and scams. Some of these so called tribal lenders – or short term installment lenders – are actually payday lenders that want to dodge the regulations and the rules. This way, they can charge you high interest rates without any repercussions.
Tribal loans claim that they are “loans that benefit everyone.” However, there are some states where this type of loan is not a legal form of lending. Refer to our payday loans and usury guide to learn if a tribal loan is available in your state.
Tribal Loans Are Very Expensive
Tribal loans be presented as alternatives to payday loans – but in truth, they are just as expensive as payday loans. Sometimes, they can even be more expensive. Usually, a tribal loan has an APR that ranges between 150% and 300% – which is already fairly expensive. Some even go higher than that. To the tune of 1,500% APR. No joke. And perhaps the greatest disadvantage is that you are not always painted a clear picture of the APR before applying. You will only be informed of the APR after you have submitted your application. This is another reason you should do business with a transparent lender.
Loan Terms Are Up to the Lender, Not You
Many tribal lenders will allow you to choose the loan term – but that does not apply to every lender. In most cases, the lender will impose a loan term on you, to which you will have to comply. So, even if you prefer making monthly payments, you ount of money borrowed, you may also be automatically assigned the number of payments. That said, if you want to have more control over your payments, you should apply with a lender that is not only transparent, but offers flexible repayment terms.
The Bottom Line on Tribal Loans
Tribal loans represent a more convenient alternative to your classic payday loans. They may be expensive, but they are a great option if you have bad credit and are in need of emergency cash. Still, if you want to avoid being scammed, you might want to carefully read the loan documents and do your research. Before signing anything, make sure that there aren’t any hidden costs. Also, you might want to ensure that your lender is backed by NAFSA. Otherwise, you might be dealing with scammers