A so-called payday loan helped a local woman get her car back on the road at a time when she was strapped for cash. But a year later, she says the loan put her in "financial quicksand" she has been unable to escape.

"I pay it back, but then I have to borrow it again or I won't be able to pay my other bills," said the Seabrook woman, who did not want to be identified.

A vicious cycle, she says, has caused her to take out 26 two-week loans last year at a fee that translates to an annual interest rate between 400 and 600 percent.

A two-week $100 loan would cost her $120, while a $450 loan would be $540.

"I think I probably have spent $1,800 in fees, but I have no other choice," she said.

Stories like hers is one of the reasons the payday loan industry is under attack all across the country.

Payday loans have been banned in 12 states, including Maine, Massachusetts and New York. Critics argue they profit from the poor, while supporters of the industry say they are providing a valuable and needed service.

In New Hampshire, there are 62 payday lenders who last year gave out $160,000 in loans. But starting in January 2009, that number of payday lenders could be down to zero.

Lawmakers passed a bill in February to put an end to excessive interest on payday loans in the state by capping it at 36 percent a year. The bill is scheduled to go into effect in January.

Those in the payday loan business say the new law goes too far. "We would have no other choice but to close our stores," said Jaime Fulmer, spokesperson for Advance America, which operates 20 stores in the New Hampshire, including one in Seabrook.

Fulmer said it would not be economically feasible to stay in business with a 36 percent rate cap. "Each one of our stores would lose $100,000 a year. The law is effective prohibition of the industry."

The industry, he said, has gotten a bad rap due to a small amount of people who misuse the loans. "The majority of the people who use our product use it responsibly," said Fulmer, who notes his company is up-front about what the loan costs to consumers.

Ryleigh Simms, a loan officer out of Manchester, said, "We do not loan to the poor and desperate. We loan to the working middle class. We loan to people who might live paycheck to paycheck, but who might need more help when something unexpected comes up. A broken car, an unexpected bill; these are all reasons people come to payday loan offices."

Fulmer noted that a payday loan is cheaper than bouncing a check at the bank and that the majority of residents in the state wants them.

A study conducted by Zogby International found 70 percent of residents in New Hampshire want to keep payday loans available.

Critics, however, point to another study conducted by the Center of Responsible Lending, which shows borrowers who receive five or more loans a year account for 90 percent of payday lenders' business.

The new law has also gained support from the state Attorney General's Office, the state banking commissioner, the New Hampshire Local Welfare Administrators Association and the New Hampshire Council of Churches.

Fulmer said payday lenders in the state want to work with the Legislature to create a bill that will work for everyone and not drive them out of the state.

They would like to see the new law be postponed until there is further study.

A bill before the House aims to create a study committee to look at access to consumer credit for people in the state.

The bill, SB 472, was already approved by the Senate.

Fulmer added if the state doesn't change the date, the jobs of 200 employees who work in the payday industry in the state are in jeopardy.

"All this does is invite offshore unregulated Internet lenders to come in," Fulmer said.