Someone with a $300-a-week benefit can write a lender a personal check for the same amount and walk out with $255 in cash after paying a $45 fee. The lender then cashes the check a couple of weeks later.
On an annualized basis, that interest rate is 459 percent.
Lolita Moore said the expensive loan filled a gap.
"If there are no other alternatives at the time, you know, it's either have your lights turned off or you get a loan and you continue to live," said Moore.
Under a new proposal, state Assemblywoman Nancy Skinner (D-Berkeley) wants to cap the interest rate on payday loans covered by unemployment checks to 36 percent.
Federal law already caps the interest rate for the military at 36 percent. This proposal is a state version aimed at extending it to California's unemployed.
The industry points out the cap forced stores to cut back payday loans to military personnel because the rate didn't cover their cost, and it warns the same could happen to the unemployed.
"What, in effect, you will do is limit the choices available for short-term credit in the marketplace for these consumers," said Greg Larsen, a spokesman for the California Financial Service Providers Association.
But consumer groups say the help is needed to break the cycle of debt.
"The reality is most borrowers in California who start out with payday loans end up taking out 10 loans in one year," said Lara Flynn, legislative director in California for the Center for Responsible Lending.
Lolita Moore hopes the rate cap is approved in case she needs to get another payday loan.
"I think it will make life a little bit easier and show a little bit more sensitivity to people that have less," said Moore.
Numerous attempts to regulate the payday industry even further have failed. The industry spent at least $2.5 million lobbying Congress last year.