In reality, these loans are dangerous and damaging, often sending people into a downward financial spiral. The Center for Responsible Lending’s 2004 estimates 387,686 Virginia consumers borrowed $988 million in payday loans.

The numbers aren’t good for members of the armed forces, either. In a Pentagon report summary posted on CRL’s Web site, the Department of Defense estimates about 17 percent of military personnel use payday loans. DoD has also listed payday lending as one of the top 10 key issues impacting the quality of life of U.S. Soldiers.

‘‘Payday lending is one of a bunch of predatory methods,” explained Leonard Toyer, financial counselor with Army Community Service. ‘‘These practices tend to favor the vendor as opposed to the person utilizing the services. The advantage is to the people loaning the money.”

The requirements are simple for receiving a payday loan: a bank account and steady source of income. The loan recipient writes a post-dated check to the lender for cash. Interest rates are exceedingly high, usually around 300 percent or more. Repayment is usually required within two weeks.

‘‘Unfortunately, 75 to 90 percent of people can’t pay it back in that prescribed time,” Toyer said.

If the recipient cannot pay the loan off when it’s due, usually two weeks later, he must deal with late fees, bounced check fees and possible legal action.

To avoid default, the borrower must pay the loan off or roll it into a new one with the same high rates. This cycle continues, never allowing the borrower to get ahead.

‘‘They’re constantly rolling over two or three times trying to get out of the hole,” said Toyer. ‘‘Generally, unless they come into some kind of windfall where they can plunk a good chunkof money down, they’re stuck.”

According to CRL, fees from borrowers with five or more renewals per year account for 91 percent of payday lenders’ business.

Toyer believes many Soldiers in the National Capital Region might consider payday loans due to high living costs. But finding out why Soldiers use these loans, or even accurate numbers on how many Soldiers are using them, is difficult.

‘‘Since finances are so tied to careers nowadays, a lot of Soldiers are reluctant to come forward and say they used a payday loan,” said Toyer. ‘‘They know a lot of times, units don’t look favorably on that and might consider it irresponsible.”

Toyer has seen a few Soldiers that are lucky enough to escape the trappings of payday lending only to get looped back into the mix again. ‘‘Sometimes they get comfortable and know if they run into a situation, they can go back [for another loan]. But that doesn’t necessarily mean the second time they utilize it, something won’t happen to cause them to fall into that debt trap.”

In Virginia, lenders can charge $15 per $100 of a payday loan, with the maximum loan amount being $500 and maximum loan length at four weeks. Many other states are slow to fight the payday lending business because, according t o Toyer, they feel they offer a legitimate service to people in need.

‘‘They try to mount that argument but fail to point out in their practices how they become abusive to people using the services,” he said.

Rather than deal with restrictions in their home state, some payday lending businesses even bankroll their services in states such as Nevada, where there are no restrictive limits on fees. Crossing state lines also makes it more difficult to enforce laws since each state operates differently, Toyer said.

Many of these businesses stay ‘‘just under the wire of being legal,” Toyer said.

To combat excessive rates, last October, President George W. Bush signed the 2007 National Defense Authorization Act , which takes effect this October. This will cap interest rates for military personnel at 36 percent and prohibits the use of a personal check or other method to access a borrower’s bank account.

The law won’t stop Soldiers from using payday loans, Toyer said, but it will lessen the amount of debt a person carries with it.

The Army is taking its own steps to combat payday lending. Army Emergency Relief offers interest free loans through the Commanders Referral.

According to Trina Reliford, the Army Emergency Relief officer for ACS, the referral grants Soldiers interest -free loans. With a commander’s approval, Soldiers can fill out an application and receive a check in hand the same day. Soldiers may receive up to $2,000 a year in two loans and the first loan must be repaid before seeking Commanders Referral again.

The timeline for paying back the funds is prorated depending on budget and current finances, Reliford said. Either way, the terms are much more flexible than those of a payday lender.

She hasn’t seen many Soldiers come in seeking the assistance, but encourages it over using dangerous high-interest loans. ‘‘We try to get Soldiers educated and tell them to come to us first and stay away from payday lending.”

Toyer agreed, saying he discourages payday lending in all cases. ‘‘When everything shakes out, you’re talking about [people] paying anywhere from 400 to 600 percent interest rate for the cost of those loans, and that’s ridiculous.”

The Army also offers an emergency food program that helps Soldiers buy food when funds are tight. ‘‘If it’s a choice between paying your bills or buying food, pay your bills and then come to us,” Toyer said. ‘‘We’ll help you with that rather than you going to a [payday] lender and ending up deeper in debt.”

In the end, Soldiers benefit most from education. As director of the Financial Readiness Program, Toyer plays a key role in teaching service members how to handle their money.