There’s no shortage of loan providers marketing to people who need a little bit of cash as soon as possible. They all offer the idea that better days are ahead. Unfortunately, most of them know that their target customers are in tight spots and use that leverage to charge some pretty outrageous prices. Before working with any of them, you need to know exactly what you’re getting into. If you’re currently in need of a small loan Better Days won’t be much help.
They’re no longer offering loans.
Drowning in online payday loan debt?
Credit Summit may be able to help.
What was Better Day Loans?
Better Day Loans was a tribal “payday loan alternative” provider. They offered short-term, high-interest loans to “help you get the cash you need quickly and without any hassles.”
Unlike traditional payday loans, tribal loans are actually installment loans. The borrower gets the lump sum upfront, then pays back the principal and interest over time. Most payday lenders require their borrowers to pay the full balance within just a couple of weeks, at their next payday.
READ MORE: What are tribal loans and tribal lenders to avoid
Was Better Day Loans Licensed?
Better Day Loans didn’t have a license to lend from the California or federal governments, but they didn’t need one. They’re a tribal lender, which means that they’re a Native American-owned business. Specifically, the Kashia Band of Pomo Indians of the Stewarts Point Rancheria took credit for running the company.
Because the U.S. government recognizes them as a sovereign nation, they don’t have to obey the rules that usually govern payday lenders. They can charge higher interest rates, ignore licensing requirements, and give out loans much larger than the California state limit for payday loans ($300).
READ MORE: 11 popular payday lenders
People who don’t want to risk working with a potentially predatory lender like Better Day Loans should consider the following instead:
- Take out a Payday Alternative Loan (PALs): For people who want to stick to borrowing options, consider using a PAL instead of a payday or tribal lender. They fulfill many of the same needs and have many of the same traits, such as small principal balances and low application requirements. However, federal credit unions provide the loans, so their interest rates are much more affordable.
- Sell some unnecessary possessions: Most people looking for a payday loan only need to make a few hundred dollars. But it’s easier and less risky to sell a few personal belongings than it is to take out an expensive loan. With all of the various resale platforms — including Craigslist, eBay, Mercari, NextDoor and Facebook Marketplace — there are buyers for almost everything in your garage.
- Cash advance apps: Download a cash advance app (Earnin is a good one) right to your smartphone. It’s free. These apps allow customers to get an advance on their next paycheck. Users usually aren’t charged any interest or fees, instead they ask customers to leave a “tip” for the service.
- Tap into the gig economy: Even relatively affordable loans are risky, and selling belongings isn’t sustainable for repeated emergencies. People with more time and energy than money or stuff should look to earn more instead of taking out debt or selling something. The gig economy has options for every possible worker under the sun, even dog walking. Drive for Uber or Lyft, pick up some food delivery shifts for DoorDash or Uber Eats.
Tribal payday lenders are an easy and accessible way to cover an emergency expense, but they almost always create more problems than they’re worth. At best, they delay an emergency for a while. At worst, they trap borrowers in a cycle of debt that becomes increasingly difficult to escape.
READ MORE: Best ways to eliminate credit card debt and become debt-free for good
The Bottom Line
For those who were simply looking for a yes or no about whether Better Day Loans is a good option, the answer was no.
Better Day Loans was simply too expensive. A borrower who took out a $500 loan with them would end up paying over $3,400 in fees and interest over the life of the loan under their standard plan. That’s an APR of 780%, which is almost twice that of the legal limit for non-tribal payday lenders in California.
Even if you have bad credit and desperately need a loan, there are countless better alternatives.