What is tribal lending?

Whenever you find yourself in dire financial straits, certain institutions are there to help. Payday loans are quick and convenient, but sometimes unavailable, as a few states have outlawed them altogether. There is another, more accessible, the solution to cash shortages – tribal loans. Tribal lenders are a type of institution to turn to in case of financial emergencies. They offer a specific type of product – installment loans, and their funds have to be returned on a short-term basis.


As the name suggests, these organizations are located on tribal land, and they are thus subject to specific types of regulations. Overseen by the communities, such lending institutions are not obliged to follow restrictions applicable to conventional lenders. 

The Native American Financial Services Association (NAFSA) represents many of these lenders, and it allows tribes to provide Americans with an array of responsible loan options. In fact, multiple Native American programs (health care, housing, education, etc.) exist thanks to funding received through the practice of short-term and payday lending

Owing to sovereign immunity, money is even lent to citizens from states where payday lending is not allowed. Bear in mind, however, that tribal lending may also be outlawed in your state of residence.

Range of products

In terms of services offered, you receive a similar range of borrowing options but without all the limitations imposed on alternative lenders. What distinguishes some tribal loans from conventional payday alternatives is installments. You do not have to find enough cash for a lump sum. Instead, a customer may split their total amount into a few regular payments. This facilitates budgeting and makes repayment much less of a burden.

How it works

The most common practice is known as “Rent-a-Tribe”. This means that tribal providers partner up with third parties for the purpose of giving short-term loans. In this scenario, the tribe acts as the owner entitled to a share of the annual percentage rate. Importantly, both parties are protected by tribal immunity. 

Make sure it is safe

Tribal self-regulation causes controversy when it comes to APRs and other aspects of the lending business. As transactions take place in sovereign tribal states, state financial and federal agencies have no jurisdiction and may not interfere in their activities.

Sadly, irresponsible lenders do exist in tribal communities, but there are ways to avoid getting deceived. Tribes may engage in deceptive practices to generate revenue. First, check that your potential provider’s tribe is in the Online Lenders Alliance (OLA) – this guarantees fair treatment of customers. 

Before applying

Before hitting the submit button, be sure to consider the following alternative solutions to money shortages. 

1. Side job

The internet is a giant e-market that lets you sell any unwanted items, participate in ridesharing, etc. 

2. Free local assistance 

State agencies, non-profit organizations or charities may provide financial help or free services. 

3. Payment extension 

Consult your bill provider to prolong your payment plan or negotiate an extension.

Remember that defaulting on any loan causes stress, and short-term options bring the most severe ramifications. With reasonable budgeting, however, these may be successfully avoided.

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