> Payday lenders do not charge refinancing/rollover fees, as with mortgages, and the interest doesn’t compound (unless of course she takes out a new loan to pay interest on the first loan)
Yes, they absolutely do charge refinancing and rollover fees. They don't call them that, of course, so they can skirt state consumer protection regulations, but that's what they are. And oh yes, they get their users to take out new loans to pay off the interests on the first loans. That's actually their entire business model. You know what proportion of payday lender's business comes from this exact thing? 76%! (http://www.responsiblelending.org/payday-lending/research-an...)
Their business model is wholly and fundamentally based on the inability of non-creditworthy people to keep their obligations. If their customers paid back everything on time, they would go out of business instantly. That is what I call unethical. At best.