What is tribal lending?

Many tribal lenders are represented by the Native American Financial Services Association (NAFSA), which advocates and enables tribes to offer responsible online loans.

Many beneficial Native American programs are funded with money from short term/payday loans. These include health care, housing, and various educational and youth programs.

Tribal lenders can lend money to tribal and non-tribal borrowers, and they can even lend money to customers in states where payday lending is normally illegal. While many are legitimate and fair lenders, keep in mind that because they are a sovereign instrumentality, they cannot be sued.

Is it safe to take out a tribal loan?

Considering that tribal lenders don’t have to follow any state statutes, a common concern is whether or not they are safe. Yes, they are generally safe, but they’re not cheap. Just like regular payday loans, tribal loans carry extremely high APRs. This is the main reason payday loans are prohibited in many states.



  • How can I view the laws applicable to my tribal loan?

You would have to look up the Consumer Financial Services Regulatory codes for  the specific tribe that you’re borrowing from.

  • Can I get in trouble for borrowing from a tribal lender?

So far, there have been no cases of this happening. Only the lenders have been prosecuted for unfair practices.

  • Do tribal lenders provide loans to all 50 states?

Some do, but not all of them.


Many tribal lenders use their sovereign immunity to circumvent standard payday loan regulations.

A tribal lender is a lending institution that is based on tribal land and operated by the Native American community. Tribal lenders offer many of the same products as traditional lenders, but because they are based out of reservations, they are protected sovereign territories and they don’t have to adhere to the same restrictions.


What’s the controversy about?

Many American Indian tribes have the financial resources to be able to fund their lending business and are members of the Online Lenders Alliance (OLA), which offers peace of mind to consumers. Unfortunately, some less self-sufficient tribes are engaging in illegal and irresponsible lending practices in order to gain revenue.

Tribal lenders will partner with a 3rd party, non-tribal lender to provide short term loans to consumers. The tribe operates as the official owner and collects a percentage of the APR. Both the tribal lender and the 3rd party lender are protected by the tribes immunity. This practice is often referred to as a “Rent-a-Tribe.”


Tips for taking out a loan from a tribal lender

The ability to self-regulate lending codes has led to a lot of controversy surrounding tribal lenders and their practices, particularly the high APRs. Due to the high interest rates and the possibility of extra fees, it is very important to have a solid plan to pay back your debt. Defaulting on your loan could cause more financial stress than you had when you initially applied for the tribal loan. If you choose to borrow money, it’s very important to read all the fine print and get a clear breakdown of the interest, fees and loan terms.


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