Tribal loans are popular everywhere as they provide an easy way of financing with simple procedural policies. There are many different types of loans provided by the tribal lending communities of Native America. Here, in this article, we will get a clear idea of the basic difference between the most popular tribal loan terms.
First, Tribal Lending is the common loan option available for financing. Payday lending is the very short loan taken to solve the liquidity problems of the borrowers. To know more about it in detail visit https://onlinepaydayloanquickes.com/what-are-tribal-payday-loans/.
The basic difference between the two terms is as follows.
Tribal lending is an installment payment option for repayment of the loan. The loan can be paid back in the installments notified by the lender while taking a loan.
Payday lending is a one-time repayment loan. The total amount of the loan is to be paid back in a definite time period. Usually, it is a single-day loan scheme.
Tribal lending loans have the flexibility to pay the repayment amount in installments. It gives a good time period to the borrowers to arrange the money for repayment gradually. It avoids the load on the borrower while paying back the amount.
Payday lending has a fixed date on which the total amount of the loan is to be paid back. This is less flexible and does not allow the borrower to pay back the amount in parts.
Financial capacity of the borrower
In the case of tribal lending, the financial capacity of the borrower does not matter much. As the repayment process is long, every borrower gets sufficient time to arrange the money for the repayment.
The financial capacity of the borrower matters a lot in the case of payday loans. A borrower with poor financial performance should not go with the option of payday loans. It will be a huge risk for them to pay back the total amount on a single pre-decided repayment date.
Requirement of Collateral
Long-term tribal lending requires complete information of the borrower. Complete filing procedures with pay records are checked out before providing loans. The tribal lending parties have to communicate for a longer-term and duration, therefore, they ask for minimum security requirements due to an abrupt change in the environment.
The payday loans are for a short-term period. And, the contract ends after the repayment on the decided date. The payday loans are generally taken during an emergency and hence no requirement of collateral is needed.