Consumer advocates and politicians spend a hell of a lot of time complaining. They complain about evil corporations, they complain about unfair treatment of special interest groups and the complain about other consumer advocates and politicians. And, in many cases, they complain about payday loans.

They complain so loudly that the FTC even has a payday loan warning on their website.

So, what’s the problem? What are people worried about? Well, there are several issues that opponents of payday loans raise:

1. High interest rates. Payday loan rates typically range in the hundreds of percent when calculated as an APR (Annual Percentage Rate). Even the worst credit cards tend to max out at somewhere around 30 percent APR, and these numbers are vastly above the 10 percent or less that most consumers can get on auto loans and car loans. Opponents see these high interest rates as predatory and usurious.
2. Nefarious connections. Some opponents of payday loans suggest that these businesses are connected to the mafia or some other criminal element. For the most part, these kinds of accusations seem to be unfounded and probably more based on the idea of the mob-based loan sharks that you’ll find in the movies.
3. Racism. A disproportionate number of minorities take out payday loans. This leads some opponents to suggest that the real reason that payday loan companies are in business is to make sure that poor minorities stay poor. This kind of class warfare talk is also used to rail against pawn shops and “buy here pay here” automobile dealerships.
4. Property values. In some cases, opponents of payday lenders are really more concerned about what’s happening in their local community in terms of property values. Payday lenders often have bright and sometimes gawdy signage, for example. In many cases, property values of nearby businesses may drop when payday lenders come into town.
5. Payday loan rollovers. Many opponents of payday loans talk about how borrowers wind up taking out one payday loan after another, and thereby wind up paying fees over and over again. They suggest that a 14-day term, which is pretty standard for payday loans, is too short a term for any loan and that it almost guarantees that the borrower will have to take out at least one more loan before they can get the whole of the debt paid back.

Photo via aturkus