I was thinking about what we had before Payday Loans, and what we had was local shops cashing cheques for a fee.
My local shop used to cash a £50 cheque for a £1 fee.
So, let's consider the math of that:-
Borrowing for 2-3 days (clearing period), or let's say 1/122 of a year. 1/50th is a 2% interest rate, so, the annual interest rate is:-
Now, that's cheaper than payday loans (although if you change it to 2 days, you get a higher figure). But it doesn't make 4000% interest rates look quite so bad, does it?