Turning a tax refund into a cash loan – quick access is promised by online as well as brick-and-mortar tax prep services all around – seems like the logical thing to do, but it can actually turn out to be a costly mistake. Within the industry, getting this kind of cash loan quick is referred to as a ‘refund anticipation loan’ that uses a pending refund as collateral.
It follows its own rules for offering a cash loan, quick turnaround and repayment terms. Below are advantages of a payday cash loan when compared to a refund anticipation loan:
- Getting a cash loan quick is as simple with a payday advance as it is with cash loans funded by a tax preparer. Since payday loans online are not tied to an actual tax return, this form of personal loan is in fact even easier to obtain year-round than a refund anticipation loan.
- A tax refund loan requires disclosure of the most intimate financial details. It is also only available once per year, for the average consumer. This does not make it a useful loan product for the consumer on a tight budget or who seeks to incorporate the cash loan in her or his day to day fiscal responsibilities.
- The Americans for Fairness in Lending (AFFIL) reveal that the costs surrounding the origination of a refund anticipation loan are equal to a consumer loan with a 1,300% APR. Compare this to average payday cash advance loans and even bad credit loans, and it becomes quickly obvious that this kind of annual percentage rate is excessive.
- Adding insult to injury, online payday loans offer money within hours; refund anticipation loans only offer a cash loan quick if the consumer consents to a tax filing on the spot. This is outstanding cash that could be in the consumer’s bank account within as little as 10 days anyways.
- In 2007, consumers in desperate need of quick cash loans actually spent a total of $900 million to receive their own money – owed to them by their local and federal governments – a scant 10 days before it would have deposited into their bank accounts. This translates into roughly one taxpayer out of every 15 got fast cash at an exorbitant rate.
These facts make payday loans the logical choice during tax time and beyond. Even better, due to the availability of no fax payday loans, information can be forwarded to the loan originator via the Internet and there is no need for making a trip to the copy center or pack and ship store to send out a fax.
All the consumer needs for online payday loans is a computer, and Internet connection and a printer. Last but not least, since there is no tax return attached to this cash advance, it truly is a cash loan quick, easy and financially advantageous to the consumer. Is it not time to say ‘no’ to the exorbitant rates and ‘yes’ to the kinds of cash loans that make fiscal sense?