Sometimes you may need money fast. Maybe you have bad credit, or you just can't afford to take out another loan. So instead, you might opt for a payday loan or a cash advance. These short term loans normally only last a few weeks, and can often get you the cash you need in less than 24 hours. Many payday loans and cash advances can be obtained online and take just minutes to apply for. Instead of waiting in line for money at a bank, or asking your boss to give you your paycheck before you have earned it, you can get the money from one of these services and have it electronically wired to your account. From this description, you may be thinking that this sounds like a great deal. But watch out.

Payday loans are not free. In fact, they often come at astronomic interest rates. In many cases, you interest rate on your payday loan will be over 100 percent! Along with this, payday loans and cash advances often come with caveats. If you don't read your contract carefully, you may be strapped down with processing fees, late fees, and other expenses you weren't anticipating. In addition, you might not be able to pay your payday loan back on the due date that is normally only days away. A payday loan or cash advance usually repays itself by taking the money you owe, plus interest, out of your account on the day the loan expires. If the loan defaults, then you will need to pay late fees and apply for a roll-over. This means you will be getting another loan to repay the loan that you previously neglected.

Once you start using these rollovers, it can create a serious complication. You may get stuck paying thousands of dollars after not too long, and this may lead to a bankruptcy in the end. If you are not financially secure, don't take a gamble on a payday loan. Look for more practical ways to get the money that you need. Take up an extra job if you can, or ask a family member to help you out. There are other dangers to short term loans. Sometimes online short term lenders will scam their customers by stealing their personal information. Also, your cash advance history may make its way to your credit score. If you pay the loan back on time, this could be a good thing. But if you don't, your credit score may plummet.

About ten million Americans borrow a short term loan every year. Yet researchers at Vanderbilt Law School have discovered that those who received quick cash after a payday loan application were more likely to file for bankruptcy than those whose applications were denied. In fact, people who receive a payday loan are twice as likely to file for bankruptcy. Consumer Affairs warns Americans that payday loans and pawn loans often account for about 11 percent of a person's debts when he or she files for bankruptcy, if they took out any payday loans at all. One researcher says that payday loans are the straw that breaks the camel's back in the world of bankruptcy.

When the payday loans start to pile up, many borrowers tend to keep taking out more and more of them. One study shows that people who take out a payday loans are most likely to take out another five before the year is out. The loans become strangely addicting, causing men and women to run to the store for another hundred dollars to make it through the month. If you have already filed for a bankruptcy, and are considering a payday loan because they do not require good credit, then you should still steer clear. These loan companies may bring you back to the spot you are trying to avoid.