For example, in Italy there's a special kind of payday loan that is limited by law to 1/5th of the net paycheck. It is taken off the paycheck by agreement between your bank and the lender's. The combination of these two rules makes them more likely to be paid successfully, and gives them a better APR than e.g. credit cards despite being essentially used for the same purpose as subprime payday loans in America. There's also a maximum legal APR of ~18% for these loans (it varies every quarter), which is better than e.g. the ~24% maximum legal APR of credit cards

Unbounded APR and "letting the market figure it out" is not the solution.