When it comes to filing taxes, those who are due a refund are generally not the last ones to file. Getting that money is very important, and sure, the faster the better, but getting a loan to "instantly" provide you with the money may not be the best idea. Read on to find out more.
Tax refund anticipation loans are credit based loans provided by a particular bank (depending on the company you choose to have file yoru taxes.) These loans will generally provide you with a check within 24 to 48 hours after your return has been filed, giving you almost immediate access to the refund. The loans are then paid back with the actual refund you would have received from the IRS. Sounds great, right? Well, maybe.
Not everyone is going to qualify. Your credit will be checked. Depending on your credit report you may or may not be given the full amount of your refund. Those who have credit enough to qualify for the loan, but less than perfect credit may find that they only get half, possibly even less than half of the refund amount given to them.
Let's first look at the credit aspect. You'll need to speak to a tax professional to learn more about the specifics of the program to determine whether or not you wish to run your credit in an attempt to qualify for the loan. If you know your credit isn't all that great, it would probably be best to keep the inquiry off your report and e-file with direct deposit, because you'll get the money in about two weeks with that method. If it's borderline and something requires you to have the money quickly, give it a shot. The worst they could say is no.
Let's look at the fees and risks associated with the tax refund anticipation loans. You're going to be charged a fee for the loan. This, in addition to whatever you are paying to file the return will be taken from your refund. Is this something you can afford to do? Now, while most tax professionals are completely correct with their refund amounts, and those that may not be back themselves up and offer you protection--let's consider that your refund is less than the loan amount. You've spent the loan. They've gotten your refund, and now you still owe them money. You may run into issues with repayment, and you will likely be charged interest. Is this something you can prepare yourself for, just in case?
Answering these questions and fully understanding the entire scenario from both a credit and financial situation will help you determine whether or not to get one.
We are not in any way here to suggest that refund anticipation loans are a bad thing, and we aren't here to suggest that they are a good thing. We are simply saying that it's something you should think about before doing. Remember, the advice you find here will not replace the advice of a tax professional.