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Today's post is a guest post from Pound2Day.

There comes a point in many people’s lives where money is tight and funds are short. Bank accounts are tapped.  Credit cards, for whatever reason, aren’t an option, and there isn’t a good place to turn.  Often, and hopefully it’s a one-time thing, people find that they need short-term influxes of cash. Short Term Loans are one option of getting access to money fast when needed.  Here are some of the benefits and drawbacks of short-term loans so you can make a more informed decision about your monetary needs and if this is an option you want to consider.


An applicant can get money fast, often within a single day’s notice. If money must be raised (and I emphasize the word must) quickly, this can get you that money fast.

This is often an avenue for those with poor credit who need a short-term loan. Banks will charge those with poor credit huge fees and often refuse them outright because they’re seen as a high risk. With cash advance loans there’s practically no background check. Often, the only proof that you need is documentation of current employment.

There’s very little paperwork.   The application process, usually, only takes about 30 minutes for every person.


These loans often have a much higher interest rate than you will pay elsewhere.  Fees must also be taken into consideration when weighing the overall cost.  Because of the increased costs, use of these should be the exception and not the rule.

While these can be convenient, these are often limited in the amount you can borrow.  This is actually good when you consider the interest rate, but if you need a higher amount to pay rent or a larger bill, a short term loan might only cover part of what is needed.

The terms vary, but these loans are meant to be paid back immediately or when the applicant gets his or her next paycheck, usually within a week. If a person fails to pay back the full amount within the agreed upon timeframe then it will result in huge penalty costs and can also adversely affect credit scores.

When the next paycheck does come, the money must be there to pay the loan back, and not spent or earmarked for other purposes.  Otherwise, this can send one on a downward spiral, and the cost could end up being double or triple the original amount, not to mention the potential for garnishment of wages. This could end up putting the person in a tighter spot than the previously were and should be avoided at all costs.

Consumers should also realize that short term loans have their benefits, but that they must understand the risk. If used responsibly, they can be a short-term solution. If not used with the right mix of forethought and understanding, they could end up doing more harm than good. Understand all of the facts and risks, and make sure you know how this will affect you beyond the point of getting the cash you need when deciding if a short term loan is right for you.