The Free Lance-Star has bought into the falsehoods about payday loans spread by the products' opponents.

A recent editorial ["Payday loans are no bargain," Dec. 19] claims that "a payday loan seems like a quick fix. All too often that quick fix becomes a link in a chain that leads to bankruptcy."

In truth, most payday loans get paid off; the nationwide default rate is 7 percent. The FLS editorial asserts that "many payday lenders are clustered around military bases."

Yet a June 2006 study by the Consumer Credit Research Foundation found that only 1.3 percent of all payday loans are made to members of the military, and only 13 percent of military members in the immediate vicinity of a payday loan store took out a loan.

The editorial asks, "Why not limit payday lenders to 36 percent?"

The reason is that between a 7 percent average national default rate and a $9,000 average monthly operating expense, payday lenders will lose money at that APR. A $14 fee per hundred borrowed is the minimum most lenders can charge and stay in business.

It is not time to shut payday lenders out of the state. If that happens, demand will not vanish. Borrowers will get loans on the Internet (which are more expensive) or bounce checks (at $50-$60 per check).

Strangely, the editorial does not come down on banks with their onerous NSF and overdraft fees.

While payday loans cost consumers only $4.2 billion last year and they received short-term credit in exchange, the banks made $52 billion on NSF and overdraft fees.

Lawrence Meyers Santa Monica, Calif.

Lawrence Meyers is a partner in Payday Loan Capital LLC, a firm that helps payday lenders obtain money to grow their businesses.