A third party lending institution takes out a loan from a bank, usually in the hundreds of thousands of dollars. A loan like this will have a term of one or two years, and around an 8% interest rate. The third party lender then partitions the larger loan up into smaller $1.5k-$2k loans. A $1500 loan with an 8% annual interest rate would cost around $1532 after a year (if you assume there's no minimum payment). The $1500 loan represents a profit of about $32 for the bank after a period of a year, less then a dime a day. When you get a payday loan, you'll take out a loan for $1500 for a period of 1-2 weeks (let's say 14 days for good measure). If you were paying for the loan from a bark, you would need to repay the bank $1514, from their ring_The_Two_Types_Of_Contracts.html">perspective, it's not worth the money to do business on that small a scale. If you take the out same loan from a payday loan business, you'll pay 1650, or 10% on top of the loan value. If you do the math, you'll that the profit for the payday loan lender is unreasonably high. If you're hard pressed for cash, take out a personal loan from a credit union. If you have bad credit, digging your grave deeper isn't going to get you out.