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A payday loan does have high interest rates. This is not because the lender is trying to take advantage of emergencies, but because they are a short term lender. A short term cash advance via payday loans can average 15 to 30 percent interest over a maximum of three weeks. A long term credit card or bank loan averages 7 percent interest over several years or longer. The payday loans are meant to be short term loans, not long term loans that are constantly refinanced with monthly statements. This means that the payday loan company assumes greater risk at the same profit level as other financial institutions.
A payday loan provided by a reputable payday loan or cash advance company does not take advantage of people. It is meant to be used only for a short term emergency situation by employed persons who need a little bit of help between paydays for emergencies. This is a very common occurrence when most families live paycheck to paycheck and may not be financially prepared for emergency repairs, travel or medical expenses.