A few years ago, a man came to pastor Wes Helm at Springcreek Church in Garland, Texas, and opened up about his financial troubles. Helm looked through his budget and noticed one major monthly expense: a payday loan fee three times more than the amount of the loan itself.

"I thought, this can't be legal," Helm said. "Our church started digging into it and looking into it in our community and found not only was it legal, but that they were all over the place, that dozens and dozens of our families in our church had lost thousands of dollars in fees, they had lost vehicles, sometimes even homes."

Helm and other faith groups convinced city officials to pass stricter payday loan laws. Springcreek Church also plans to offer small, personal loans to parishioners at 4 percent interest.

Helm hopes the loan program will expand beyond the church. He wants local employers to start similar programs for their workers.

But Helm hesitates to call them payday loan alternatives.

"If you have somebody that's robbing people in your community, you don't need an alternative to robbery," he said.

The Pew Charitable Trusts estimates that 12 million Americans use payday loans every year. They're designed to be very short-term, but they often roll over into new loans because borrowers can't pay them back.

The average loan is $375, rolls over into new loans for five months, and racks up $520 in fees and interest payments.

"Borrowers want three things: lower prices, small installment payments, and quick approval," says Alex Horowitz, a senior researcher with Pew.

Payday loans are aimed at people who cannot typically get approved for bank loans.

"This is not a consumer that can just whip out a credit card, or tap their home equity," said Greg McBride, chief financial analyst for Bankrate.com. "These are oftentimes consumers that have little in the way of other assets, they have poor credit or no credit in many cases, and even documenting income can certainly be a challenge in these cases."

Over a decade ago, Todd Hills tried out the payday loan business himself.

"Once we got in the business and really watched how it actually works, what we learned was a customer never gets out of debt," said Hills, who now runs the online pawn shop Pawngo.com.

Within six months, Hills quit payday loans and offered those customers his own alternative: He converted them to pawn loans, which he said were less damaging and far easier to pay off.

The root of the payday loan problem is poor budgeting and planning, said Jim Chilton, founder of the Society for Financial Awareness, a nonprofit education group. He counsels people to consider other options, such as refinancing a car.

"People that plan are managing their money," Chilton said. "Their money is not managing them."

But Diane Standaert, director of state policy for the Center for Responsible Lending, said many payday borrowers turn to these less risky options only after they get in trouble with payday loans.

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