Instant tax refund loans are becoming extremely popular today. There are over a million people each year who consider borrowing money from their returns and while this wasn’t once possible, it’s very much so today. The truth is when you are file your return, you can ask to borrow against the potential refund amount which is usually granted within a short period of time and the money you were to receive via refund will be kept by the government. It’s a quicker way to receive a refund for some but it’s actually not a good idea. However, why should you avoid refund loans?
Processing Fees Are Very Costly
Let’s say you were going to receive a refund of almost two thousand dollars, but you couldn’t wait and asked for a refund loan, the cost over processing fees would be very crimpling indeed. There are a variety of fees associated with the loan. You have an initial loan fee then you have electronic filing fees, not to mention the fees for preparing the loan and those are the ones you know about. However, the fees can add up considerably and you are losing potentially hundreds of dollars right there. One of the best reasons to avoid a tax refunds loan would be because of the high fees. Find out more informations in this post.
If There is a Problem the Tax Refund May Not Cover the Loan
For most people, they receive their refunds without too much trouble. However, just saying something caused a delay in your refund and the loan was due to the paid, you could be left in hot water. Tax refunds loans are technically short-term loans, but if it isn’t paid back in a certain amount of time and the refund isn’t issued or doesn’t cover the amount, you still have to repay the loan. Also, it can turn into a long-term loan since you don’t have the money to pay back. The interest rates could also be extremely high, which means you may struggle to repay the loan.
High APR Charges
Every loan has an APR (interest) amount in which the lender charges the borrower, but refund loan APR charges can increase dramatically. As already mentioned, interest rates can be extremely high, sometimes over two hundred percent – if not two thousand – and they are shocking rates. Yet, people who are desperate for “quick money” accept this without question. However, what would happen if the tax refund did not cover the loan? You would be stuck paying a loan with APR that was too high to be able to afford. For this reason, it’s a bad idea to seek out refund loans.
Risk is Too Great
In times of need, we look at the worst places for help and while refund loans can appear to be great relief, they aren’t always. Yes in certain circumstances they can help out a lot but sometimes, they aren’t as good as you’d think. At the end of the day, it’s your decision whether refund loans should be used. However, caution is urged as you never know if the refund amount will cover the loan. Tax refund loans have helped many in the past but again, caution is needed and if you can hold on a little longer until the refund comes through, do so.