Re: If you need a payday loan then you shouldn't get one.
For some people that may be true, but there's a fundamental failing on the part of the moralistic opponents of payday lenders, and that's to understand that conventional interest costs don't scale down well for very short term and small loans to higher risk borrowers.
If you're a middle class liberal, you probably have ready access to a fairly cheap rolling overdraft facility and rather more expensive card credit. The former comes with an interest rate of perhaps 7%, the latter perhaps 18%. But because you already have arrangements with these people, the risk is low, the payment arrangements are in place, and they've already done the checks to know how much they think you're good for. You probably think this is normal and fair, and that everybody should have access at that price.
Now consider a payday lender customer. By definition the customer does not have access to a rolling overdraft or available card credit (either 'cos they've maxed it out, or they don't even have a bank account). When the lender sets them up as a customer, they've got few good ways of judging your creditworthiness, so they're pricing in a shed-load of risk. Then there's the admin of loan setup, which is probably five quid a pop (fully loaded call centre & systems costs, staff time and all company overheads). You've got to send out statutory written guff that nobody reads, so there's a quid or so on printing and postage. Then there's collections and payments processes, and follow up on overdues, all time consuming and costly. And of course you've got marketing and distribution costs. None of these largely fixed costs scale well for small payments, and that leads to apparently astronomical interest rates.
There's some really good analysis done a few years back on payday lenders in Ontario which looked at the costs of the industry, and structurally will not be dissimilar to the UK:
This established that the costs to the lender of a $300 loan for two weeks were $65. That's the fat end of 600% interest. Any additional fixed charges that get applied (like quite reasonably charging overdue customers quite modest fixed sums for reminder letters and for late payments) dramatically increase the measured interest rate. The liberals are outraged by all of this, but where's their answer?
You can't lend unsecured to the financially inept for 7% annual. The welfare state has bloated beyond belief and has nothing more to give (well until the whelk-stall bunglers get in next year). And the fixed costs don't go away. So the choices are to live with it, or to regulate the interest rates down to a nice, Hampstead liberal approved number like 9%, and then wonder why there's no payday lenders, and good old fashioned unregulated doorstep lenders are back, complete with their even more expensive loans and traditional approach to late payments.