A tax refund loan can be described as a short-term loan that allows you to borrow using your tax refund. They are termed as refund anticipation loans since you receive the credit with the expectation of a return. These loans are meant to offer a taxpayer quick access to money they are not expecting to have at the end of the tax season. Reputable companies or lenders are well known for offering such loans to their customers. The amounts you can borrow differ depending on the company.
Another plus for the tax refund loans is the cost. With standard short –term loans or even personal loans, there is a fee to be paid, interest, or both to be able to borrow money. Cash advance from a credit card can be another instant method, but you end up paying double digits in interests. On the other hand, tax refund loans often charge no interest or fee, making it the best option at the time of repayment. The fees charged by different lenders can be high and make one pay almost double the borrowed amount.
A reputable company can process a refund loan in a matter of minutes. The longest will be 24 hours to get your loan approved and funded. Compared to a short-term personal loan, like those offered by online lenders, while it is possible to get approval relatively quickly, you may wait for some business days for the funds to reflect in your account. For an emergency that requires an instant remedy, the tax refund loans will come in handy.
No Credit Check
Another benefit of a tax advance loan is that it does not entail a credit check. It is, therefore, an attractive option for individuals with poor credit marks but requires funds quickly. The loan is guaranteed by your income tax refund calculated on your returns. Someone with no collateral and poor credit still gets approved because the refund amount acts as collateral. Besides, it does not hurt your credit since the lenders can choose to do a soft pull on your credit history as opposed to hard pull. The main thing the lender will review is your tax return and your income.
In conclusion, the tax refund loans are quick remedies if you need funds instantly as they are easily accessible, charges no interest, and do not check your credit scores. However, ensure that you can approximate how much you anticipate getting at the end of the tax season. If your tax preparer miscalculates your deductions, you may end up will less than the amount borrowed.