Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Written by Sara Routhier
Director of Outreach Sara Routhier

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: May 17, 2022

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Native American tribes across the country have diverse perspectives in every way including money. While some tribes struggle with serious infrastructure issues, others seem to do extremely well running casinos and similar businesses. Now some indigenous tribes have decided to become a payday lender. They offer similar amounts and financial services as you might expect elsewhere.

Online payday loans are simple cash advance loans that are lent online. These payday loans are usually lent indiscriminately, and come in small amounts of only a few hundred dollars.

But since these cash advances are lent to virtually anybody with a checking account, they often carry very high interest rates. These high interest rates are one of the reasons that consumer advocates have been trying to implement regulation on both state and federal levels to restrict these loans. Unfortunately, it’s very easy for borrowers to start with a small cash advance and get themselves into serious debt by only paying the minimum amount each month pushing their responsibility further and further out.

What Is Different about Tribal Loans?

Tribal loans are marketed as an alternative to payday loans for those who want to support Native American communities or those who just need emergency cash. While they do may of the same things, there has been some controversy around tribal lending because the tribes have sovereign status. In other words, competitors complain that they may not have to follow all the same laws other online lenders are forced to follow.

While some tribal leaders have successfully argued that CFPB regulations don’t apply to them, this doesn’t work everywhere. Some jurisdictions have cracked down sweeping tribal lenders into the net of lenders being penalized for predatory lending practices. Some tribal lenders have faced complaints for things like not disclosing the interest rate and other loan terms.

Typically, unlike a payday loan, tribal loans are generally treated as installment loans. They’re short term with high interest, but not required to be repaid by the next round.

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Can Other Businesses Use Native Americans’ Sovereign Status?

Native Americans are not the only group to realize how much freedom from regulations they have on tribal lands. While it’s not easy, the argument has been upheld in some areas that tribal lenders are immune from financial regulations.

Because of this, lenders in various states are eager to rush into partnerships with various tribes. They want to benefit from sovereign immunity to sell high-cost loans without as much red tape and regulations.

Tribal-based online payday loans can carry massive interest rates. Some have been known to carry the equivalent of an annual interest rate above 750 percent. Lawsuits against Tribal-affiliated online payday lenders usually fail regardless of accusations of predatory lending. Despite the failure of state regulators to police Indian-affiliated online payday loans, federal agencies such as the Federal Trade Commission and Consumer Financial Protection Bureau have begun to monitor the industry with interest.

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Are you looking for a small loan? You used to have to visit a payday loan office in person. Now you can do everything online whether you’re looking for typical payday loans or other short-term loans or an extended plan.

Because of the extreme interest rates, many experts recommend paying them off within the first cycle or shopping for short-term installment loans. Whether you want to consolidate debt, buy or refinance a car, or something else, you can shop for a personal loan without getting into a cycle of debt.