Editor’s note: This is the second in a look by the Times-Journal at the payday loan business.

Payday loans may be a quick infusion of cash to cover a temporary shortfall, but can cause permanent financial problems if not properly managed.

The loans offer a maximum of $500 at a high interest rate. Many payday loan places charge an annual percentage rate of 450 percent. The APR charged by payday loan places greatly exceeds rates charged by credit card companies. Payday loan interest can add large amounts to loans, making them difficult to overcome, which is the main argument by state legislators for more regulation.

Selma residents simply argue for the financial industry to have mercy on the impoverished.

“When a working mother comes to them for an advance to put food on the table for her children or when a single father needs his check a few days early to pay rent, it isn’t right they will now be locked into a cycle of repaying debt on astronomically high interest rates,” State Rep. Darrio Melton (D-Selma) said. “It’s past time for this state to stand against predatory practices that only perpetuate the cycle of poverty for our friends, families and neighbors.”

Warnings of financial danger haven’t stopped some from getting into deep financial debt after failing to pay off the entire amount of a short-term loan in time.

Ward 8 Councilman Michael Johnson told a story of a friend who ended up spiraling into a cycle of debt shortly before the 75-year-old man’s death.

“A good friend of mine, an older guy, came to me after only borrowing $500 and he ended up owing over $3,000,” Johnson said. “He eventually died, but he died with his car getting taken from him and still owing some money on that payment.”

Johnson said the man paid a small amount each week, but the interest was too great to overcome.

“He told me ‘Michael, I’m not able to pay them back in full, so I go and pay a little bit every week, but the interest just compiles and compiles,” Johnson recalled the man saying. “‘I might give them a few dollars every week and it still compiles. I don’t know how I’m going to pay it.’”

Johnson said the man’s story is an example of the payday loan businesses taking advantage of residents of a city with a poverty rate of nearly 40 percent.

Nearly a dozen payday loan businesses line Selma’s streets, which isn’t surprising, according to Melton.

“The payday loan places seem to creep in places with high poverty,” Melton said. “Of course you won’t find them in the well-to-do areas because they won’t tolerate that, the income levels are higher and they have other options. Clearly something needs to be done.”

Bills intended to lower payday loan interest rates were passed in the Alabama House of Representatives during the 2013 legislative session, but stalled in the senate because of industry lobbying efforts, according to State Rep. Patricia Todd (D-Birmingham).

Though legislation was unsuccessful, Gov. Robert Bentley implemented a centralized database to help enforce the $500 cap on how much can be borrowed from short-term, high interest lenders.