Utah is a “business-friendly” state. While this can be fine for legitimate businesses such as grocery stores, clothing stores, car dealerships, plumbing businesses and others providing a beneficial product or service, the state of Utah has “business-friendly” laws that also extend to payday loan companies. I’ll argue that these laws are anti-family, which is inconsistent for a state that places a high emphasis on “family values”. The Utah Legislature could easily correct this.

Payday loans are often advertised as quick, easy cash for people who need help between paychecks. But these loans can be a debt trap. Payday loan companies often take advantage of vulnerable people by charging extremely high fees and interest. This can lead to a cycle where borrowers keep paying more and more, without ever getting out of debt. The problem is worse in places where the law doesn’t protect consumers – states like Utah with little to no regulation.

State Laws: Protection vs. Predatory Lending

Whether a payday lender can trap you in debt depends a lot on where you live. State laws set the rules for payday loans: how much interest can be charged, how many loans you can have, and whether payday loans are even allowed at all. Some states have strong protections for consumers, while others have almost none. This means in some places lenders must play fair, and in others they can do whatever they want.

• States That Protect Consumers: In 21 states and Washington, D.C., payday lending is illegal or effectively banned​ These places either outlaw payday loans completely or set a strict interest rate cap (often around 36% Annual Percentage Rate, or APR). A 36% APR cap means lenders can’t charge crazy high interest. Strict caps drive payday lenders out of these states​ because they can’t make huge profits under those rules. For example, states like New York, Massachusetts, North Carolina, and others have laws that prevent payday lenders from operating or limit interest to reasonable levels. In these states, people are protected from the payday loan debt trap by law.
• In other states, the laws are much weaker (or don’t exist at all). Utah is a prime example. In Utah, payday lenders face almost no restrictions. There’s no maximum loan amount, no limit on how many loans a person can take, and no cap on interest rates​. In fact, Utah law doesn’t set a specific interest limit – it only says that rates can’t be “unconscionable,” a term so vague that it’s practically no limit at all. As a result, lenders in Utah charge extreme interest rates. The average payday loan in Utah has an annual percentage rate (APR) of 652%​ one of the highest in the nation. That means a loan of a few hundred dollars can snowball into a huge amount due to interest and fees. Other states with little regulation, like Idaho, Texas, and Wisconsin, also have average APRs well over 500% on payday loans​. In these states, predatory lenders thrive because the law lets them charge outrageous rates and fees.
• Mixed Approach States: Some states do allow payday loans but with certain rules to protect borrowers. For instance, Colorado used to have very high payday loan costs, but in 2010 the state passed a reform. Now, Colorado requires payday loans to be payable in installments (multiple payments over time instead of one lump sum, and it capped the interest rate. The result was dramatic: the cost of a payday loan in Colorado dropped to about one-third of what it used to be​. Borrowers saved money because interest and fees were much lower. And guess what – people in Colorado could still get loans when they needed them. After the reform, the number of people using payday loans went down only a little (less than 10% reduction) which means the law fixed the worst problems (the super-high costs) without cutting off access to credit completely. States like Ohio, Virginia, and Hawaii have also passed reforms to rein in payday lenders and lower costs for consumers​. These examples prove that strong consumer protections can stop predatory lending and still allow fair loans for those who need them.

Many payday loan agreements are written in dense, complex legal language that even people with high reading comprehension struggle to understand. These contracts often bury key details in long paragraphs with technical terms, making it hard to grasp the real cost of the loan.

• Example: Instead of saying,
  “If you borrow $300, you will owe $390 in two weeks,”
  the contract might say,
  “The finance charge shall be assessed at an annual percentage rate of 391% APR, compounding biweekly with an additional maintenance fee and renewal costs applicable upon non-payment of principal balance.”
• Why It’s Predatory: The APR (Annual Percentage Rate) is often hidden in fine print or formatted in a way that makes it hard to calculate the true cost. Many borrowers don’t realize they’re agreeing to pay hundreds of dollars in fees for a small loan.

A study found that most payday loan borrowers don’t understand what “APR” means—and payday lenders know this. Instead of clearly stating how much the borrower will pay in dollars, they use confusing math formulas that make the interest seem smaller. This is especially confusing for individuals with lower reading comprehensions, English language learners, or anyone who doesn’t have friends or family warning them against these loans.

A state where the majority of the lawmakers are in a religion that emphasizes the importance of “being honest with their fellow-men” should want fairness and transparency. The lending laws in Utah are a direct result of the state legislature. The legislature should focus on regulating payday loan companies more and worry less about going after public worker’s unions. When parents get trapped in ridiculous loan cycles, they are less able to provide for their kids. When young single people get trapped in these loan cycles, they will be less prepared to have kids in the future.