Payday lenders rates range from $15 to $30 per $100 borrowed. Critics say that this is an extremely high interest rate. Based on a $100 loan with a $20 fee this a 520% APR. When credit cards and other loans have much lower rates why would someone take one of these loans? These type of loans are a last resort for most people who take them. They have exhausted their alternatives in most cases or should do so. I would only recommend going this route if you can't borrow off of friends or family. If your not able to take a small loan from your bank, or a line of credit. If it's not possible for you to use your credit cards instead, get overdraft protection on your bank account or pawn, sell some valuables.
Payday lenders defend their interest rates and fees because of high operating costs. These are unsecured loans. They don't do credit checks or take collateral. There is a 10%-20% default rate. critics charge that payday lenders are predatory. That they cause undue hardship on those that are struggling financially already. Payday lenders say that there fees are not out of line when considering there high operating costs and large default rates. They compare their fees to late penalties from banks and overdue payment fees. A bounced check fee of $40 from a $100 check = 1040% APR.
