Short term personal loans, commonly called payday loans, are available to most working people in the United States and there’s a debate raging across the land as to whether getting short term loans means long term problems.

On the one hand these small loans - generally between $100 and $1,000 - can get people out of impending financial doom. For instance, a car that needs to be fixed, a child’s tooth that was chipped and needs mending, or a check that has to be covered.

The money can come in handy, that’s for sure. But the interest rate - often between ten to twenty percent - can be a big problem. That’s because, unlike loans from more traditional institutions, these short term loans must be repaid out of the borrower’s next paycheck.

And if money is really tight, they might have to borrow again just to keep their heads above water. Then the short term personal loan might not look as attractive.

Essentially these payday loans are advances on a person’s paycheck. Most people who avail themselves of this service take out an average of eight payday loans a year. Even a $200 loan at 20% interest would come to $320 dollars in interest alone over the course of the year.

If you need the money sometimes you have no choice. However, explore your options.

There are other ways you might be able to get the money.

* Can you get an advance on your paycheck from work? If you can it will probably be interest free.
* Can you borrow the money from a friend or your family?
* Is there anything you can sell if an emergency comes up?

If you find yourself with no other options and you feel you must get a cash advance, check the rates at various payday loan companies. For example, online payday loan company interest and fees can vary by as much as five to ten percent form one company to the next. And that can really add up.

If you feel you must look into short term personal loans there are two agreements you must look at if you want to get the lowest rates.

Tags: personal-loans

Label: Do Short Term Personal Loans Mean Long Term Trouble?