The long-term average savings rate in America is just under 9%. At that level, it would take almost a year and a half to save up $5,000 on a $40,000 after-tax income. It’s no wonder that so many Americans resort to debt to help them pay their bills when they struggle so much to build an emergency fund. It’s not safe to simply borrow from the first lender you find, though. Before you commit to doing business with one, you have to do your due diligence. Now that the internet has all but eliminated anonymity, there’s information on just about every lender you may encounter. FirstLoan is no exception. Here’s a FirstLoan review that will tell you everything to know to determine whether or not they deserve your business.
What is First Loan?
First Loan is an online, short-term installment loan provider. They admit to being a “very expensive form of borrowing” that people should only use to pay for their short-term needs. For example, people may need to cover medical emergencies, home repairs, or their rent. That’s eerily similar to the excuses that payday lenders use.
That comparison would be bad for business, though, so First Loan addresses the parallels. They claim that their loans are superior because they “offer more flexible repayment options while still providing the cash when you need it.”
The truth is, there’s virtually no difference between the two types of loans in practice. Payday loans come due more quickly, but they have just about everything else in common. They’re both extremely costly, come in relatively small principal amounts, and exist supposedly to help with emergencies. They’re also both easy to qualify for, even for applicants who probably can’t afford to pay them back.
Is First Loan Licensed?
First Loan lists a mailing address in California, which means that they’re supposed to register with the Department of Business Oversight. They don’t have a license with the state, though, because they’re what’s commonly known as a tribal lender.
That means they are an extension of a Native American tribe, operate (supposedly) out of their land, and adhere only to their tribal regulations. Because of “tribal immunity,” they don’t necessarily have to respect the rules put in place by states or the federal government. That leads to them frequently charging interest rates far above state limits. For example, California’s limit is 460% APR, but First Loan’s sample rate on their website is 778% APR.
Like many tribal lenders, First Loan discloses their tribal status in their fine print. Their website states: “First Loan is a Native American owned business operated by the Elem Indian Colony of Pomo Indians, a sovereign Tribal nation located in the United States. First Loan abides by all applicable federal laws and regulations and tribal law as established by the Elem Indian Colony of Pomo Indians.”
That makes it sound like they may have some respect for federal regulations, but they’re only referring to the federal law that states Native American tribes have jurisdiction over themselves. In any case, federal law does virtually nothing to reign in payday lenders since that’s almost entirely up to state governments.
Typical Loan Terms
First Loan has similar loan terms to other payday, tribal, or short-term installment lenders. They might position themselves as “an excellent alternative to payday loans,” but they’re barely (if at all) an improvement. Here’s what to expect from their products:
- Principal balances between $200 and $5,000 ($1,500 maximum for first-time customers)
- An APR between 600% and 795%
- Weekly, bi-weekly, and semi-monthly payment schedules available
- A total repayment schedule of up to a year (no details, but the sample loan seems to be 26 bi-weekly payments)
- No fees for paying loan balances off early
- Non-sufficient fund fee of $25 plus an additional $25 fee after four days late
- Additional fees in the loan agreement
FirstLoan has an example of a typical loan on their website, and it demonstrates how outrageous these terms really are. A loan for $500 at a 778% APR with a repayment schedule of 26 bi-weekly payments would mean payments of $149.75. Of the first one, only $0.17 would go toward the principal. The total cost to borrow would end up being $3,387.82. That’s almost seven times the original principal balance!
First Loan has been around for at least a few years, so they’ve had enough time to develop a meaningful track record. It’s always wise to get a second opinion when researching a lender, and third and fourth wouldn’t hurt either. To that end, here are some other First Loan review highlights.
Better Business Bureau
Let’s start with the Better Business Bureau (BBB). They’re one of the best places to get a feel for a company because they work a little differently than most crowdsourced review sites. They serve as a middleman between businesses and their customers. Receiving and sharing messages between the two parties helps them assess a business’ customer service. That includes their proactivity, timeliness, and effectiveness.
First Loan’s BBB rating is a C+. That’s not the worst possible score, but it’s not great either. They’ve only been around for a few years and have already received 57 complaints on their BBB profile alone. They have been proactive about responding to each of them, though, which is what’s keeping them from getting a failing grade.
The user reviews on the site are universally negative. There are only eight, but all of them are for the lowest possible rating (1 out of 5 stars). Most of the reviews are about the outrageous cost to borrow, but that’s not their only problem as a company. 28 of the 57 complaints are about billing and collection issues, which is even more concerning.
Crowdsourced Review Sites
The more traditional crowdsourced review sites seem to echo the issues found in their BBB profile. For example, First Loan’s Trustpilot profile shows 1.4 out of 5 stars based on a solid amount of reviews (88).
Unlike their BBB profile, First Loan has done a lot less to manage their image on Trustpilot. They haven’t claimed the profile, responded to any complaints, or invited anyone to review directly. That’s actually a good thing since organic reviews tend to paint a more accurate picture.
Just about every other First Loan review tells the same story. Thirty-six out of the 43 ratings on their Trust Mamma profile are for 1 out of 5 stars. They’ve even managed to show up on Scam Advisor’s radar and get a low trust score there, too.
While we don’t recommend borrowing from First Loan or any other tribal lender, it’s not surprising that many people make the mistake of doing so. They have several qualities that make them appealing, especially to people who can’t always qualify for more traditional loans.
For example, they have:
- An application process that people can complete in just a few minutes
- Low qualification requirements that make them available to people who struggle with creditworthiness
- The ability to fund loans as soon as the next business day
- Low principal balances perfect for covering small expenses
At first glance, these loans seem like a godsend to people who need a little bit of extra cash to make it to their next paycheck. However, the fine print reveals that they’re little more than an extended payday loan and just as dangerous.
First Loan’s products present all of the same risks as other tribal installment loans. As is true of their peers, it’s rarely a good idea to borrow from First Loan. Even those who can afford to pay off their loan on their first payment date (two weeks later) will find that they’ve essentially completed a payday loan transaction.
Here are the issues with First Loan:
- Their APRs are significantly higher than almost any other form of credit (except for payday loans).
- Borrowers will likely struggle to make their payments, triggering extra fees and make the problem worse.
- If First Loan does something illegal, borrowers can’t sue First Loan like they could a traditional lender.
Tribal lenders are all risky, and First Loan is no better. If anything, their loan balances are larger than some of their peers, which makes them even more dangerous. The finance fee on a $5,000 installment loan at their maximum APR of 795% would generate roughly $30,000 in interest over a year-long repayment term.
How to Apply for a First Loan Loan
Applying for a First Loan installment loan doesn’t take much since they have far fewer qualification requirements than traditional banks. To be eligible for funding from First Loan, prospective borrowers need only:
- Show proof of employment or another source of consistent income
- Have a valid bank account in good standing
- Provide a legitimate email address and phone number
- Be at least 21 years old
- Live in a state where First Loan offers funding
Anyone who meets these bare minimum requirements has a good chance of successfully receiving a loan after applying. In fact, it won’t take very long at all to do so. Remember, their application process is one of their few advantages. All it takes to apply is to provide the following information:
- Personal Information: Housing details, proof of identity, and contact information
- Income Information: Employment details (or other income sources) and earning levels
- Banking Information: Bank account details so First Loan can transfer funds and debit your account for payment
Keep in mind that while the application is simple, it’s risky to hand over this information to anyone. Even if First Loan doesn’t abuse it themselves, the data could end up in the hands of someone who will. Don’t share these details casually.
Better Alternatives to First Loan
Besides a lack of cash, one of the most common reasons people turn to a lender like First Loan is that they have low credit scores. Many applicants assume that they can’t qualify for a loan from a bank. They think that means their only options are providers who charge an arm and a leg.
That doesn’t have to be the case. Payday lenders and tribal lenders claim that their rates are necessary to make money given the risks they take, but that’s not true. There are plenty of lenders out there who lend to risky borrowers and have APRs that are far, far below what First Loan charges. Here are some of our favorites:
- Credit Unions: Unions are one of the best sources of support for people who don’t have the best credit scores. They require a membership to receive one of their loans, but their rates are often much more affordable than other providers, even with a poor credit history.
- Secured Personal Loan Providers: Lenders are often unwilling to give loans to people who have demonstrated that they’re not the best at repaying their debts. They don’t want to risk not making a return on their money. However, they may be willing to loan to people with bad credit who put up collateral, such as their car or house. Just be sure to repay secured loans to avoid losing the asset.
- Cash Advance Apps: For those who just need a little bit of money to make it to their payday, cash advance apps can be a great option. Earnin, for example, allows people to receive funds for their work the day they do it instead of waiting for their paycheck. Even better, there are no mandatory fees or interest when paying the balance back.
Any of these options would be safer for most people who need cash than First Loan. If it’s at all possible, use one of them before resorting to a tribal lender.
If you were just looking for a First Loan review that would tell you in simple terms whether you should borrow from the company, the answer is a resounding no from us (though that’s probably not a surprise at this point). For the vast majority of borrowers, First Loan is too expensive to be helpful. They’ll only make matters worse. Use one of the recommendations we made above if you need some help with your bills.
Better yet, see if you can solve your problems without resorting to debt in the first place. If you can reduce your expenses or make a little extra income on the side, it might save you from ever having to take on another loan again. If you’d like some help, a credit counselor can be a powerful (and affordable) asset. Reach out to a local counselor to get started today!