The problem is that the actuarily "fair" price of these loans is very high because the risk of non-repayment is very high.
If 25% of people don't pay back a loan, then you need an interest rate of at least 33% on the 75% who do pay you back in order to break even.
The only solutions are (a) to try to do a better job of identifying who will/won't pay you back or (b) to do more to make sure that people do pay you back.
(a) has the disadvantage that you aren't able to help a lot of people who most need the help. (b) can easily become exploitative as you increase the pressure on people who are at risk of defaulting on their loans.
If the interest rates have to be that high, maybe these loans just shouldn't be made. There's got to be a better way to "help" these people than saddling them with predatory loans.
There were a lot of well meaning non-profits who thought that microcredit loans to low income people in the developing world, unfortunately some of the results didn't work out as well as they hoped.
