As someone who worked at a pawn shop, I can tell you it's not so much that the interest rates are high, but that the loans are small, and costs to the lender are fixed at a certain point.

Some of it also is to encourage quick payback, generally the longer a high-interest runs, the more likely it will be defaulted.

Plus, many borrowers have credit / banking problems and/or their loans are too small for other lenders.

That said, it seems a field ripe for "disruption" - crowdfunding - maybe called crowdlending / crowdgranting?