When you need to come up with cash quickly, payday lenders, tribal lenders, and short-term installment loans can seem like your best bet. After all, they’re everywhere and they all promise that getting and paying back the loan is super easy. What’s not to love? A lot, as it turns out. If you can’t pay the loan back on time, interest rates and fees can leave you drowning in debt.
Let’s take a closer look at just one of these lenders: Little Lake Lending.
What is Little Lake Lending?
Little Lake Lending is a “short term loan” lender based in California. They offer short term, small-balance installment loans to people who need cash ASAP. According to the front page of their website, they offer “loans up to $2,500” and promise that, most of the time, loan funds will be deposited into a borrower’s bank account the business day after the loan is processed (and, presumably, approved).
Here’s a quick snippet from their website:
“Little Lake Lending wants to make borrowing easier by making sure you receive your funds as quickly as possible and by not charging you penalty fees for paying off your loan early. In most cases, we can have funds delivered to your account the business day after your application has been processed.* Our highly-rated Relationship Managers are available 24/7 to answer your questions, assist with payments, and provide any additional support you may need.”Little Lake Lending website
Is Little Lake Lending licensed?
Little Lake Lending is headquartered in Lakeport, Calif., but is not licensed by that state. Nor is there a business license for a company named “Little Lake Lending” listed anywhere on the website.
Instead, the license published on the lender’s website is issued to a company called Layma, LLC by the Big Valley Band of Pomo Indians Consumer Financial Services Regulatory Authority.
So, what does this mean? It means that, from the look of things on the website, Little Lake Lending is a tribal lender that is licensed by the same tribe that owns and operates the company.
There’s nothing shady about that, right?
What is a Tribal Loan?
A tribal loan, on the surface, is like any other loan. It is issued by a lender to a borrower and then the borrower pays the lender back—sometimes in installments over a period of weeks, months, or years.
Unlike non-tribal lenders, however, tribal loans are not regulated by any of the consumer protections put in place by the formal city, county, state, or even the federal government. Instead, they are subject only to the laws and regulations put in place by the tribe that licensed the lender.
What’s the Difference Between a Tribal Loan and a Payday Loan?
In a lot of ways, tribal loans can feel a lot like payday loans. Their rules are more relaxed than the rules governing loans made by traditional banks, credit unions, and financing companies.
The primary difference between payday loans and tribal loans is that payday loans are regulated by the states in which they operate as well as by consumer protections enacted at the federal level—which is why many states have been able to make payday loans illegal.
Tribal lenders, on the other hand, claim that they should be able to get away with their predatory practices by claiming tribal immunity.
What is Tribal Immunity?
Tribal immunity is exactly what you think it is: the ability of a tribe to claim that they are immune to the laws and regulations of the United States because they are sovereign and independent nations unto themselves. Tribal lenders will use their “immunity” to thwart laws that are put into place to protect borrowers. For example, they will:
- Charge interest rates that are far above state limits
- Provide loans with balances that are higher than state minimums
- Break the terms of their loan agreements
Little Lake Lending is affiliated with the Big Valley Band of Pomo Indians. The members of this tribe are descendants of the Xa-Ben-Na-Po Band of Pomo Indians and have called the area near Clear Lake home for almost 12,000 years.
From the Big Valley Band of Pomo Indians website:
“The Big Valley Band of Pomo Indians is a self-governing tribe, which means we have the right to govern our lands in much the same way that the Board of Supervisors governs the lands within the boundaries of Lake County. We have the powers to write and enforce ordinances, regulate commerce, tax, set up a judiciary and police enforcement system and other powers delegated to local governments. Because of our interrupted past, our tribal government is still weak and developing, but our membership is strong and our people are wise. Our government is similar in many ways to that of the local county government.”
Both the Consumer Federal Protection Bureau (CFPB) and the Supreme Court have been trying to crack down on tribal lenders for a while, but the process is a slow one. Tribal lenders are holding tightly to their belief that they are not subject to any laws but their own. Meanwhile, lenders like Little Lake Lending continue to offer loans that violate California and other states’ laws and that have the potential to ruin the financial well-being of many desperate borrowers whose credit is poor and cash flow is minimal.
In General, Here’s What to Expect When Taking Out a Loan from Little Lake Lending
Unlike some other tribal and payday lenders, Little Lake Lending provides quite a bit of information about their processes upfront. Their website claims that they have 24/7 customer support agents on hand, that the application process is quick and easy, and deposits are made quickly. They also claim that borrowers can pay off their loans early without having to pay any penalties or fees. That’s the good news.
The bad news is that, like most other tribal and payday lenders, their rates and fees are grossly high. They are so high, in fact, that borrowers, even those with stable and high incomes, could potentially have a lot of trouble paying the loan off in time. These rates and fees are prohibitive for anyone who is hoping to be on solid financial footing during the repayment process (which could take years).
Here is an example from Little Lake Lending’s website on the repayment terms for a $400 loan. It is repaid in 12 payments of $127.50. That means it will cost $1,130 in interest to borrow $400 for about six months.
Typical Loan Terms with Little Lake Lending
- An APR between 720% – 795% depending on repayment schedule
- $25 fee for payments that are more than three days late
- $25 fee for payments that are returned or not processed because of insufficient funds.
- Principal balances up to $1200 for first-time borrowers
- Loans up to $2500 available to repeat customers after they make enough successful payments
- It looks like the payment schedule requires borrowers to make payments every two weeks.
- There isn’t a standard repayment period, it depends upon how much you borrow, and several other factors.
- Zero penalty for paying the loan off early
Some of the rates, etc. aren’t available without having an application approved. This information was taken from the company’s website and the sample payment plan published there.
Before applying for any loan, it is important to thoroughly its lender. As of this writing, there are 82 complaints listed with the Better Business Bureau against Little Lake Lending. The BBB also gives the lender an “F” rating, though Little Lake Lending is not currently accredited with the bureau.
Interestingly, TrustPilot gives Little lake Lending a 4.7 out of 5 rating. The site lists more than 1,300 reviews for this lender, more than 80% of which are positive. When scrolling through the reviews, however, many of them said the exact same things, which feels a little shady.
The Pros and Cons of a Loan with Little Lake Lending
The biggest thing Little Lake Lending has going for it is its loan approval/dispersal rate. The application takes just a minute or two to fill out, is approved quickly and, if you apply on a weekday, the funds should be in your bank account within 24 hours—though applications processed on Friday, Saturday and Sunday will have to wait until Monday or Tuesday for their dispersals.
The biggest problems borrowers face with loans from Little Lake Lending is the company’s ability to alter the terms of a loan agreement after it is signed (remember, tribal immunity is a thing) and its astronomical APR rate. A minimum of 720% APR means that for every dollar borrowed you can count on paying back at least $7.20. And that amount gets bigger the longer your repayment plan lasts.
How to Apply for a Loan From Little Lake Lending
To apply for a loan from Little Lake Lending, all you have to do is fill out a simple form on their website. It asks for the applicant’s usual information: name, address, SSN, whether they rent or own, and their income and banking information.
Yes, you have to give them your banking information before you can submit your loan application for processing. Considering that multiple borrowers have complained about Little Lake Lending changing the terms of their loan after they’ve signed contracts, having to give up your routing and account numbers prior to approval feels super sketchy.
Better Alternatives to Tribal Loans:
There are so many great alternatives to tribal loans! Here are a few you should try before you even start looking for money from a tribal lender:
- OneMain Financial — they’re listed as Nerdwallet’s best online loan for bad credit
- PenFed credit union — their rates are awesome, and you don’t have to be in the military to qualify anymore!
- Prosper – US News listed them as one of the top Peer-to-peer lending companies.
- Borrowing from friends and family – you can set up money pools on Facebook if you can’t find one person who can loan you everything you need.
- Credit card advance or low-interest balance transfer offer – make sure you can pay this off quickly or you could run into trouble later.
- Home equity loan or home equity line of credit – this is best for those who need large sums of money and, of course, who own their own homes.
- 401k loan – talk to the company that manages your 401k first! They might have programs you can use to keep from paying big fees or losing a chunk of your retirement fund.
- Earnin – a paycheck advance app that has a stellar online reputation
Look, nobody is going to judge you for needing to take out an emergency loan. It is important, though, that no matter how desperate you feel, you explore all your options before jumping into a deal with a shady payday or tribal lender. Doing a bit of homework can help you keep your head above water.