Payday loans often become a desperate consumer’s final lifeline to get by. But interest rates can actually exceed 100% per annum. A recent article discusses pending legislation in Minnesota to cap interest rates at “only” 36%.
My experience is that payday lenders are predators, who believe that the rules don’t apply to them. They don’t have a real bricks and mortar address and are usually found online. Because they are difficult to track down and sue, they often make flagrant abuses of the Fair Debt Collections Practices Act. I don’t believe I have actually ever seen a payday lender sue a debtor, perhaps because they have difficulty finding a reputable local law firm to represent them. But they are smart enough to honor a bankruptcy stay. Even when they are taken out in the very recent past, I have never seen one object to a bankruptcy on the grounds that a debtor fraudulently ran up debt with them.