Tribal lending – you may have heard of it but aren’t really sure about what it entails. Most of us have heard of American Indian reservations, where the United States government has parceled land to American Indian tribes. The tribes are given authority to manage the land given by the government. The tribes live and work on this reservation land. The tribes are allowed to govern themselves and are granted tribal sovereignty by the United States government, which means that to some extent they can operate under different laws than they would otherwise be required to uphold, including federal and state laws. This tribal sovereignty allows the tribes to participate in endeavors that would not usually be permitted without it. For example, tribal sovereignty is what allows some American Indian reservations to operate casinos in states that otherwise prohibit them. Another endeavor that some of the tribes take on is tribal lending, which for the most part provides bad credit personal loans.
What to Consider about Tribal Sovereignty
Tribal sovereignty can be a complicated matter. Our government is already complicated enough, with state and federal law not always matching up. On American Indian reservations, state and federal laws do not always apply. Some states have tried to change this situation, especially in the example of casinos as mentioned above. The point to consider about tribal sovereignty and lending is that this exemption from state law will also apply to loans – the tribe is exempt from your state consumer protection and usury laws. This exemption is part of how they are able to provide bad credit personal loans.
Tribal Bad Credit Personal Loans: Advantages
Tribes may be allowed to offer bad credit personal loans like payday loans in states where they are otherwise prohibited, or they may be able to offer similar loans but at lower rates. They may be beneficial in areas where there isn’t a lot of competition, because the more lending options that are available to the borrower, the better. The institutions will have to compete with each other by offering lower rates.
Tribal Bad Credit Personal Loans: Disadvantages
Because of the complications mentioned before in the differing tribal, state, and federal laws, if you have a problem with your loan, the governmental jurisdiction may be hard to figure out. You may end up without any recourse against the tribe if your state government or the federal government is unable to help you. Also, as mentioned before, you will not be protected by your state laws, so the tribe will dictate the terms of bad credit personal loans that they are offering. If you have a problem, it may also be harder to contact customer service.
If you are looking for bad credit personal loans and are considering using a tribal loan, make sure that you are fully informed about what you are getting into. You should always shop around and compare offers before accepting a loan. Be fully aware that the tribal lenders are playing by a different set of rules than other lending institutions, and protect yourself by keeping yourself fully informed about your financial situation.