The lending industry has endured criticism in recent days due to the fact that the interest rates charged for quick cash loans are at best usurious and at worst, criminal. With interest rates that can exceed four hundred percent annually, payday loans represent one of the most expensive ways to obtain credit. There are now more cash advance loan stores nationwide than there are Subway, Burger King and McDonald's restaurants combined. The payday loan business is thriving and is growing more quickly than anyone could have expected several years back.

One argument that short-term lenders frequently make that is just not true is that their typical customer is not poor, but rather from the middle class who just borrows from them for convenience. The lending industry stands by its prices, noting that A) they are providing convenience and B) the interest rates they charge aren't really interest, they are costs and C) the cash advance loans are for periods of 14 days, rather than a year, so the yearly rate is moot. The arguments that support the lending sector can be debated at length, but the loans continue to be popular in spite of laws that demand that the loan company disclose all terms in writing.
 

• Studies show that the typical payday loan customer is not particularly affluent, and borrows because they genuinely need the money. A recent study conducted in Arkansas paints a decidedly different picture from the rosy one suggested by the payday lending business.
• More than two thirds of those surveyed said they took out a cash advance loan due to the fact that they simply had no other choice.
• More than three quarters of borrowers did so because they were receiving threatening calls from lenders to whom they owe money.
• According to the study, one half of those who replied said that they applied for a bank loan prior to obtaining a cash advance loan but were turned down because of a history of bad credit.
• This survey powerfully suggests that the main beneficiaries of these loans are really the working poor. The typical customer doesn't obtain these loans because they are convenient, but because they are literally the only choice to obtain cash to pay bills or survive until the following payday.;; It's a pretty unfortunate situation when the only practical source some people have to borrow money is one that costs at least 400% per year.

There is no simple solution to serving the interests of both lenders and consumers, as the legislators in South Dakota have noticed. Clearly, loose banking regulation is a double edged sword. The market continues to define whether or not these lenders will continue to operate, because if no one wanted these cash advances, no one would buy them. South Dakota set up loose lending laws to bring lenders to the state, only to see quick cash loan stores opened on every street corner. Legislators in many states continue to try to find solutions that will allow these taxpaying companies to stay while protecting the consumers who clearly have no other place to turn.