Refund Anticipation Loan- Beneficial to the lenders or the borrowers?

The loans sanctioned based on the assurance of tax refund amount of an individual are termed as tax refund loans. These short term loans are also known as ‘Refund Anticipation Loans’. The loan amount is lesser than the refund amount and the loan is easily accessible. The offer can be considered for emergency expenses that cannot be deferred till you get your refund amount from the IRS. The tax preparers who offer this loan takes the entire tax refund amount of the borrower. However, it is not advisable to apply for the loans if your requirements can wait till you get your tax refund.

Features of the loan

The borrowers are charged origination fee for the loan and there are charges for electronic filing as well. The origination fees and all the charges associated with the offer are deducted from the loan amount. Visit our website and Some of the borrowers consider this option as there is no financial stress due to monthly payments or due to the need to settle the loans. Since there is no need for documentation, the task is also simplified. The lender is not reluctant to offer approval for the tax refund loan as the loan amount is secured by the tax payer’s signature.

The tax payer commits for the loan by signing the form which allows the tax preparer to cash out the tax refund check to cover the loan amount. The loan term is short and considering this factor, the interest amount charged for the loan is very short. This is why the financial experts are not for tax refund loans. If the tax payers can wait till it is time to get access to the tax refund, it is better to keep away from the loan. The waiting period is mostly around two weeks. Considering the high interest rates and short term, the loan resembles payday loan which aggravates the financial crisis of the borrowers at

The high interest rates are justified by the lenders as there is risk in lending refund anticipation loan. There is the possibility for the tax payers to encounter issues with the IRS officials and this might lead to a lower amount of tax refund than expected or there might even be the denial of the entire amount due to various reasons. Although the tax preparers, who are the lenders here, justify the high cost of the loan, the profit that is realized is the attraction for the lenders. The loan is more in favor of the lenders than the borrowers who are the tax payers.

When you file the income tax refund, you receive the confirmation instantly and you are notified that your tax return is free of mistakes or wrong entries. And this leads to the availability of full refund amount and this is highly advantageous to the lenders who offer loans anticipating your refund amount. Though you get financial support during urgent needs, financial experts advise you to keep away from the loan if you can manage your urgent requirements with some other alternative financial sources. 

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