Payday Loans go Native

When you think of payday loans, you probably think of the last expose you saw on television during which regretful borrowers bemoaned how they had been taken advantage of and lost it all thanks to usurious rates and false promises related to payday loans. In reality, while payday loans may not be the best and brightest option for everyone, thousands of people use this low-to-no credit lending strategy to tide them over in times of emergency, and most payday lenders are responsible business owners doing their best to keep up their business and help their customers while succeeding financially at the same time and while taking on enormous risk. Handled properly, a payday loan is a win-win situation for those that can't get help from their bank, regardless of the negative spin put out there by the media.

However, recent events have led to further degradation of the payday loan's reputation in an unusual arena: Native American tribal councils. According to a recent report by Business Week, groups of Native American business owners have worked together to establish payday loan businesses. That in itself is not a problem; after all, America is the land of opportunity for everyone. However, there is a bit of a complication when it comes to tribal involvement in the payday loan industry as these groups are not necessarily subject to the same lending laws as a payday loan business owned by a citizen of the United States. As such, they can charge rates as high as 521 percent in some cases, and both borrowers and law enforcement have very little recourse.

The tribes involved in the payday loan business argue that they should be permitted to handle these businesses as they see fit - just as they do with any other tribal business venture. One leader reports that the income from these businesses enables his tribe to fund a variety of important operations, such as healthcare and education. However, opponents of the industry complain that the rates are too high and jeopardize the consumer.

If you are considering a payday loan, you need to get all of the facts before you sign on the dotted line. As we've discussed, these loans can be a lifesaver in certain situations, but if abused, they have the potential to dramatically and permanently alter your financial condition. By taking care to evaluate your lender ahead of time and opting to work with a responsible, proven payday lender, both you and your lender can have a positive, productive payday experience.