Tax Refund Loans No Bargain
Tax-refund loans no bargain
Consumer groups say more people -- but not enough -- realize that loans to provide instant money from expected tax refunds may come at astronomic interest rates.
On average, the loans cost 85 percent to 170 percent annual interest (up to as high as 1,100 percent) -- roughly the equivalent of a "payday loan," according to a new study by the Consumer Federation of America and the National Consumer Law Center.
"If you want a fast and free refund, you can get it in two weeks or less by using electronic filing and having refunds deposited into your own bank account," said Jean Ann Fox, director of consumer protection for CFA.
The study said more consumers seem to realize that, because the number of such loans dropped by 22 percent between 2004 and 2005. But they say too many people -- especially those least able to afford them -- are still obtaining such loans.
"Almost 10 million taxpayers lost a chunk of their refunds for a quickie loan, a number that is still too high. Plus, RALs (refund anticipation loans) expose taxpayers to the risk of unmanageable debt if their refunds don't arrive as expected," said Chi Chi Wu, attorney for the National Consumer Law Center.
Many tax preparers and others offer "refund anticipation loans," which are bank loans secured by the taxpayer's expected refund. The study said such loans usually cost $30 to $125 in loan fees. Often, an extra $40 application or document processing fee is charged by some independent tax preparers.
Tax Refund Loans
Options To Avoid In Credit Repair And Building
How To Avoid Debt Consolidation Problems
Tax Refund Loans
... before someone who files on April 15 and coughs up the cash for an immediate refund. Top 5 Errors on Tax Returns And speaking of taxes The IRS reports that the most common errors on tax returns are also the simplest to fix. Here are the top five reasons that tax forms get returned: Incorrect or missing ...
How To Avoid Debt Consolidation Problems
... not optional for getting out of debt. Tax refund loans are another optional method for relieving debt, since the debtor can receive fast money. The problem again is that the loans come attached with high fees. For example, if you are receiving $900 in tax returns, you may only receive around $800. Payday ...
... the loans, which are secured by the borrower's expected refund. How an RAL works Consumer visits tax preparer to calculate refund, agrees to loan. In partnership with tax preparer, bank issues loan, and tax preparer presents check to consumer within 48 hours. IRS deposits refund directly with lending ...
... is a tax refund loan. A less direct name is a "pay stub" loan, in reference to the use of paycheck stub information to figure out how much money to loan you. While these loans are fine and dandy, they can come with some atrocious fees. Short term loans are inherently expensive. Why? The financing party ...
... average refund is about $2,150, with a typical finance charge of $100 for a refund anticipation loan - a 178% APR. Additional fees for tax preparation, electronic filing, or check-cashing can double or triple that cost. If you are not careful, you will be spending much of your tax refund before you even ...
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