Since payday loan lenders make money based on the high-interest rate on short-term loans, this is not a profitable group to extend loans to for the most part. While 36% APR may seem like a lot, you have to understand that about 60% of people who take payday loans don’t pay them back. This is the MAIN reason why payday lenders charge so much in interest for their payday loans.

For example if you took out a $500 payday loan, on average you would be paying $125 interest on that loan in two weeks, so you would pay back $625.  Now this is just below the mark for the APR as this is a 25% interest rate but you need to understand it is a 25% interest rate for TWO-WEEK loan, what happened if they can’t pay the loan back on time? The lender can only charge $55 in late payments, fees or interest before they hit the max 36% APR cap for the YEAR. This is not enough revenue to create a profitable business therefore due to the cap on military lending or military payday loans, most payday loan lenders no longer lend to military or their families.