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Tax refund loans, also known as instant tax refunds, are criticized for deceptive marketing and high interest rates. They are not real refunds from the IRS, but a company writes a check for the refund amount minus fees. While the US government seeks restrictions, tax refund loans are legal. It’s important to know what services your tax preparer offers before they take care of your taxes. Using a credit card to finance purchases while waiting for the refund may be a better option.
Tax refund loans, which used to be known as instant tax refunds or quick tax refunds, are very popular for those who want to get their hands on money that the United States IRS owes them fast. However, they have also been widely criticized for deceptive marketing and high interest rates. Anyone who decides to take advantage of a subsidized loan must carefully evaluate all the consequences it entails.
In the past, tax refund loans were billed as immediate repayments for good reason. The tax payer would get a portion of the refund back as soon as they filed their taxes. In some cases, it would take an extra day or two. However, it was a much shorter amount of time than the IRS would normally take to send refunds.
However, they weren’t real refunds from the IRS. Instead, a company, most likely the depository company, would write you a check for the amount of your refund, minus the fees, and would then be entitled to your refund. In some cases, waiting an extra week or two would earn them $100 US Dollars (USD) or a slightly lower amount.
While the US federal government continues to seek restrictions on the practice of tax refund loans, the process is still legal. Therefore, for those wishing to take advantage of it, it is sufficient to ask your tax advisor if the company you are with offers this type of loan. Not all tax preparation companies have tax refunds, but most national chains will. It’s important to know what services your tax preparer offers before they take care of your taxes.
In some cases, instant cash advance venues may offer tax refund loans in case a tax preparer doesn’t. However, in this case, it will likely act more like a traditional payday loan, where the money will leave your bank account after the tax refund has been credited to your account. While some cash advance localities may ease their rules just a bit for tax refund loans, there may still be an upper limit to how much you can get.
Ultimately, those interested in tax refund loans might be better off using a credit card to finance any purchases while waiting for the refund to be posted. Most refunds are sent within 30 days. Therefore, it is possible to make a rather large purchase and still pay for it at the end of the month before interest accrues.
Smart Assets.
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