(The older alternative to unsecured very high interest short term loans is those secured on valuables - the pawn shop).
> What tends to happen is not that people go to the Mafia (traditionally they come to you!)
The mob definitely loans money at high-interest:
http://archive.boston.com/news/world/europe/articles/2009/03...
https://en.wikipedia.org/wiki/Loan_shark#Post-criminalizatio...
> high interest loans from utility companies and landlords strikes me as an obscenity.
My point is usually that this is a lot cheaper, since these don't usually charge interest at the payday rates. Utility companies have barriers to cutting you off.
But ultimately people who have negative cashflow week-to-week are going to get in trouble. Limiting how much debt they can get in causes them to hit the buffers earlier, but less hard.
(Incidentally, this is yet another major problem with "universal credit": paying it on a 6 week delay is designed to force people to use payday lenders!)