How Payday Loans Prey On Struggling Women

A major financial issue women face is debt caused by payday loans. Payday loan lenders dress like a savior who comes to aid those in distress. But underneath it all, they are nothing but organizations who set traps that make them a profit.

These institutions always try to target women, advertising that they can make all their financial troubles disappear in the blink of an eye.

They choose economically depressed areas to set up a business and focus on attracting low-wage workers, financially troubled immigrants, and single mothers as potential customers.

What are payday loans?

Payday loans are short-term loans given by store-front lending institutions. They mostly have a duration of a couple of weeks and don’t need a good credit score to apply.

But the most jarring thing about payday loans is that it has off-the-roof interest rates. The interest rates can go up to 700%, which is extremely high for a short-term loan.

When in a financial bind, these payday loans look appealing because they are easy to get, but they don’t show how badly they might trap you in their cycle.

Why and how are women targeted?

As discussed before, payday loan institutions set up their establishments in distressed places, where jobs are less and income low.

Historically, because of unfair economic circumstances, women were, and still are in some communities, kept away from the matters related to money. Due to this reason, many women, including Person Of Color communities, have been preyed on by payday lenders.

These economically disadvantaged communities are targeted since they may not have standard banking services. In addition, they are misinformed about how to deal with their finances because of the lack of financial literacy.

Payday loans, which are marketed as a way to assist those who are struggling to pay their bills, are nothing but predatory lending. Payday lenders do not check to see if you can afford the loan; they only check to see if you are employed and have a bank account.

Another issue that leads women into more and more financial trouble is the gender pay gap. Many women, especially women of color, are the sole earners of their families.

Moreover, single mothers are likely to be the breadwinners and primary support to look after their children. As a result of the gender pay gap, they struggle to make ends meet because they are underpaid.

Women who make too little money and live paycheck to paycheck are always on the brink of an economic catastrophe. People with low incomes are less capable of building credit, getting out of debt, and breaking the poverty cycle.

Payday lenders frequently justify their practices by stating that poorer Americans with bad credit need loans such as these to cover unexpected expenses. Payday lenders say that their quick cash option will them in tough times.

Living paycheck to paycheck doesn’t come with a budget that has ample flexibility. Women trying to make ends meet find no other solution other than looking for places where they can get a loan even with bad credit.

Moreover, payday lenders create advertisements to solely address troubled people, allowing them to pay their dues by getting quick cash. 

Payday loan laws women should be aware of

States are primarily responsible for monitoring payday loans, but federal law provides some payday loan laws as protections for borrowers.

 It is mandated by the Truth in Lending Act that you be given a written estimate of how much you will owe on the loan before you agree to take the loan. The finance charge and annual percentage rate (APR) must be disclosed to you. Despite what you’ve just learned, you may still be unaware of payday loans’ actual cost.

Lenders are required to look into the borrower’s financial situation to determine whether they will be able to repay the loan while managing daily financial obligations. The lenders also must provide a notice to the borrower before collecting the amount from their account.

Also, after two failed attempts to debit the account, the lender cannot try again without the borrower’s permission. This rule was first proposed in 2016, and by June 2022, this will become a mandatory one.

Sixteen states have issued bans against payday lending, and around seven have imposed strict laws like having a term limit, capped fees, and limiting the number of loans per person to help provide some protection to the borrowers.

Few Payday loan alternatives women should try

Despite the high costs, people occasionally require quick access to cash, which is where payday loans come in. However, there are a few alternatives to payday loans:

  • Bad credit loan: This is a good option if you have a credit score below 690. Some online lenders provide loans to people with bad credit or high debt to income ratios. These lenders offer fast funding.

    After you are approved, it takes about one to two days for the money to transfer to your account. If you’re not sure if you’ll be approved for a bad credit loan, you can pre-qualify to see what lenders will offer you.

    Pre-qualifying with multiple lenders allows you to compare financing options without affecting your credit score.
  • Credit union loans: if you are a credit union member or are eligible to be one, then you have the option to go for credit union loans.

    If your credit union provides you with a payday loan alternative loan, you can use that to your advantage. You can borrow up to $1000 to $2000 with an interest rate of 28% and a 12-month repayment period.
  • A Side Hustle: Having a side hustle is another way to get some extra cash on hand. You can try online tutoring, freelance writing or graphic designing, or something in your niche that may help you earn some money on the side.
  • A Family loan: Another option is to seek financial assistance from close family or friends. This way, the high-interest rates can be avoided. You can devise a repayment strategy that specifies how much money you’re borrowing, when, and how you’ll repay it.

Keep in mind that Bad Credit Loans and Credit Union Loans report all actions like late and on-time payments to the credit bureaus, which might affect your credit score.


Even after years of progress in protecting borrowers, payday lending keeps growing. Considering other sources of funding is a better option.

Read the fine print of credit agreements, and familiarize yourself with your rights as a consumer and the range of rates available for the type of loan you seek if you require money. Also, educating yourself about your finances and learning how the lending market works would be helpful to you in the future.

Taking more initiative toward capping interest rates providing fair wages, and promoting financial education should also help women have a better lifestyle. However, all of this will only work when the effort is put into properly eradicating this problem women are facing.

Author’s Bio: Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003.

He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998, and currently works for the Oak View Law Group in California as a principle attorney.

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