LAS VEGAS (KSNV & MyNew3) -- A new study released this week found Nevada has the fourth highest payday loan rate in the country.
Pew Charitable Trusts found the rates are so high because Nevada is one seven states that doesn't have any legal limits.
According to the report, Idaho, Utah and Nevada have among the nation's highest interest rates for payday loans.
The new study shows Nevada payday lenders charging an average of 521 percent annual interest on their loans. Payday loans allow borrowers to get small loans to tide them over until the next payday.
"It's like using a pawn shop as a means of trying to balance your budget; it's not going to work," said Allen Lichtenstein, general counsel of the ACLU of Nevada, who says payday loans target the poor.
"They borrow money to get by, but it puts them in debt and they have to pay interest that is exorbitant. That makes it even more difficult to dig their way out of debt," Lichtenstein said.
Pew's research shows it takes five months on average to pay that loan back using 37 percent of a borrower's paycheck.
"Nevada does not have a cap on interest, so there's no usury law in Nevada, which means people could charge whatever interest they can get," Lichtenstein said.
A federal law was put into place for military families capping the rate at 36 percent.
We talked to one payday loan lender who says he doesn't lend to military families because the profit margins are too low.
Lichtenstein says the industry is just one of many in need of more oversight.
"It's not the only financial institution that could use better regulation, but it certainly could use regulation that would not create these kinds of problems," Lichtenstein said.