We all know payday loans should be the last port in a storm for the desperate. And with interest rates at 300% or more in some jurisdictions where such things are allowed to run uncapped, we really hope no one is out there taking out these things for non-emergency reasons.

If you work for the state of Virginia and you need a few bucks between paydays, you’re soon to have another option. You can borrow from the state itself:

Virginia said it will offer six-month loans of $100 to $500 to state employees facing financial difficulties, Gov. Timothy Kaine said. The loans have a 24.99 percent interest rate and no late fees or credit checks, and borrowers must take an online financial course and a brief financial literacy exam.

For comparison, this week’s average interest rates for some products as given by BankRate:

Balance Transfer Cards: 13.62%
Cash Back Cards: 14.04%
All Variable: 11.14%
Low Interest Cards: 9.15%

Personal loan rates for Richmond, VA:
BB&T of Virginia 15.990%
SunTrust Bank 13.990%

The personal loans also have fees involved, which, when considering a small sum like $500, probably bring the rates on them close to what the state of Virginia is offering.

So what’s really happening here? Is it the deeply cynical, “Virginia is tired of making 0.5% on its cash and would rather be loaning it out at 25% to the people it knows it can easily recover from in the future, its own employees” or  is this one of those novel, creative and refreshing cases where government is actually meeting a need and causing LESS exploitation?

Ultimately, I think my answer would depend on what they’re doing with the profits (if you know, please post). But for now, I’m gonna put this one to a vote: