To get a payday loan, you need to have a job and a bank account. According to Pew survey data, some 12 million Americans – roughly 1 in 20 adults – take out a payday loan in a given year. They tend to be relatively young and earn less than $40,000; they tend to not have a four-year college degree; and while the most common borrower is a white female, the rate of borrowing is highest among minorities.

DIANE STANDAERT: From the data that we’ve seen, payday loans disproportionately are concentrated in African-American and Latino communities, and that African-American and Latino borrowers are disproportionately represented among the borrowing population.

Fulmer says that payday-loan interest rates aren’t nearly as predatory as they seem, for two reasons

Diane Standaert is the director of state policy at the Center for Responsible Lending, which has offices in North Carolina, California, and Washington, D.C. The CRL calls itself a “nonprofit, non-partisan organization” with a focus on “fighting predatory lending practices.” You’ve probably already figured out that the CRL is anti-payday loan. Standaert argues that payday loans are often not used how the industry markets them, as a quick solution to a short-term emergency.

According to the Consumer Financial Protection Bureau, or CFPB – the federal agency that President Obama wants to tighten payday-loan rules – 75 percent of the industry’s fees come from borrowers who take out more than ten loans a year

STANDAERT: The vast majority of payday loan borrowers are using payday loans to handle everyday basic expenses that don’t go away in two weeks, like their rent, their utilities, their groceries.

Worse yet, she says, borrowers have almost no choice but to roll over their loans again and again, which jacks up the fees. In fact, rollovers, Standaert says, are an essential part of the industry’s business model.

STANDAERT: These payday loans cost borrowers hundreds of dollars for what is marketed as a small loan. And the Center for Responsible Lending has estimated that payday loan fees drain over $3.4 billion a year from low-income consumers stuck in the payday-loan debt trap.

STANDAERT: Thirty-six percent is closer to what we think of as fair and reasonable and allows credit to be offered in a way that can be reasonably expected to be paid back.

That does sound reasonable, doesn’t it? A typical credit-card rate is around 15 percent, maybe 20 or higher if you have bad credit. But to the payday-loan industry, a proposed cap of 36 percent is not reasonable at all.

JAMIE FULMER: When the consumer-advocacy folks go and advocate for a 36 percent annualized percentage rate, they very clearly understand that that’s industry elimination.

FULMER: If you associate the cost of paying company site our rent to our local landlords, paying our light bill and electrical fees, paying our other fees to local merchants who provide services to us, we operate on a relatively thin margin.

First: when you hear “400 percent on an annualized basis,” you might think that people are borrowing the money for a year. But these loans are designed to be held for just a few weeks, unless, of course, they get rolled over a bunch of times. And, reason number two: because payday loans are so small – the average loan is about $375- the fees need to be relatively high to make it worthwhile for the lender. For every $100 borrowed, Fulmer says, the lender gets about $15 in fees. So, capping the rate at an annualized 36 percent just wouldn’t work.