There are many payday loan lenders here - we call them micro-lending investors. Their target are the pensioners. Example, they will lend you 10,000 (in our currency) that you have to pay 1,000 monthly for 12 months. In effect, you pay 20% rate of interest. And the lender would get your ATM card so they can directly withdraw from your pension. Tsk, tsk, those poor pensioners are already old and still being scammed.
What you described sucks, but in reality it's a lot better situation than people in the US gets. Payday loans can reach rates of up to 300%, depending on where you get them. There are lots of entities operating offshore that are allowed to operate websites in the states as well. Lawmakers are trying to do things to stop this, but the payday loan industry is very strong, and they are met with opposition a lot of the time. Whether lawmakers are successful in limiting loan amounts and interest, only time will tell. They have some success in New York, where rates are limited. Other states, it's like the wild wild West.
Pay day loan lenders prey on people who are in need of fast cash and desperate. Most don't read the fine print either. The interest rates are beyond extreme! Paying back thousands just for a couple hundred dollars? Ridiculous.
These things are HORRIBLE. My ex took one out in my name online because it was just that easy for her to do. I find out about it, we pay it back. They kept my information and sold it to other companies. All of a sudden, every 3 months or so, I would get a phone call from a family member saying that there was a loan officer looking for me. Leaving their "attorney's" name on their voicemails and a message that says "we will take court action if you do not reply". I finally talk to a girl and ask her what the name of the company is. I write said name down. I ask her again half way through the conversation, it's different than the first. I write that one down as well. Finally, I was able to get Google up and running and ran the company names. I asked her one last time and she said "I've already told you who we are." I said "I think the reason why you won't tell me why is because you're not the company you say you are. Matter of fact, I see a forum with your name, your companies various names and the telephone number that you called me on blasting about how you're asking for the exact same dollar amount from each person that you call. You are a scam artist and a thief. I hope karma comes back and bites you one day." She hung up the phone and I think maybe put me on the do not contact list because that was the last time that I ever got a call about that again.
The fact remains that despite their unpopularity, payday loan operatives are best of friends when you go to them to line your pockets during emergencies. Though the practice is illegal, they thrive because they are fulfilling a certain niche in the financial sector. In my country, they are not illegal though some are unregulated. You should take a loan that is only a fraction of your salary with interest taken into account. Otherwise, you can use them to invest in high returns opportunities which come once in a while and in which case the high returns should be able to offset the high interest. The only advantage with payday loans is their quick processing and readiness to assist while other established players are mired in red tape.
