AN INTERIM report from the federal government's review into Small Amount Credit Contracts released in December 2015 showed between 500,000 and 1 million Australian consumers use payday loans annually.
Tasmanian social support service providers hold concerns about payday loan debts' effects on low-income consumers.
In 2013-14, Australian Bureau of Statistics figures showed 52.4 per cent of Tasmania's population was deemed low-income compared to 40.5 per cent of the nation.
City Mission Launceston Family and Support Services team leader Nicky Gray said about 50 per cent of clients either have or have had payday loan debts.
He said clients most often took out loans to fund replacing whitegoods or to pay for family costs like school supplies.
"Quite often, the fees that they're paying are just as high as if they turned around and put interest on it," Mr Gray said.
He said clients with payday loan debts often weren't sure how much they actually owed lenders.
He said taking out payday loans could lead consumers to a "perpetual merry-go-round" of debt.
Anglicare Tasmania Financial Counselling team leader Anthony Plisek said payday lenders don't ask enough questions regarding a client's financial histories.
"The consumers are already in financial distress and they are just adding to it by not following what we would think would be responsible lending processes," Mr Plisek said.
"When something's given simply, you tend to make an emotional response rather than a logical one."
Financial Counselling Australia (FCA) executive director Fiona Guthrie said the standardised loan interest cap of 48 per cent should apply to payday lenders.
Ms Guthrie said consumers didn't comprehend that the fee structure could be similar to a high interest rate.
Ms Guthrie said that despite legislative changes in 2013 prohibiting loans under $2000 that have to be repaid within 15 days, financial counsellors continued to see a significant number of clients with payday loan debts.
She said direct debit repayment "gives priority to the debt over probably more important household expenditures, such as food".
A PANEL is undertaking the Review of the Small Amount Credit Contract Laws, and is expected to submit their findings to the federal government in late February.
The interim report found high levels of repeat borrowing and the high cost of consumer leases appear to cause financial harm.
The No Interest Loans Scheme (NILS) Network of Tasmania receives state and federal government funding, and provides Tasmanians deemed eligible by Centrelink essentials including whitegoods and education supplies without interest or fees.
NILS state executive officer Rick Tipping said the network received between 40 and 50 applications weekly, and most applicants had at least one form of "fringe debt" like payday loan or rent to buy scheme debt.
"They make it so easy for people to get these loans," Mr Tipping said.
"There's very little, if any, counselling with people about whether this is a good idea, and that's really what there should be.
"If you've got a high proportion of people who are assessed as low-income, then you're going to have a high proportion of people who are accessing payday lenders."
Mr Tipping said payday lending and rent-to-buy schemes were the "evil twins" of the fringe lending industry.
He said "aspirational advertising" wrongly portrayed loans as a quick-fix solution.
"Of course, what their doing is selling debt and making money out of it - and lots of money," Mr Tipping said.
To contact No Interest Loans Scheme Tasmania, call 1300 301 650.