Facts about Tax Refund Advances

Are you planning to apply or a tax refund advance? Tax refund advances are special loans offered to taxpayers who are waiting for their tax refunds. In fact, this is the best, most affordable option for low-risk, low-cost borrowing.

Any taxpayer who has been filing his/her taxes in time can benefit from refund anticipation loans. There are many tax preparation firms that advertise tax advances to attract new customers. These lenders include credit unions, banks, and online lenders. One can bet the best option by comparing the fees and rates charged by various companies. This write-up is going to share some of the fascinating facts that you need to know when applying for tax advances.

Interest Rates

Most of the reliable tax preparers will not charge you an extra penny or charge when taking a tax refund loan. Taxpayers are advised to calculate their tax refund in advance to ensure that they are borrowing is less than refunds. One can take advantage of this service to apply for a loan at no cost. Most lenders use the tax refund service as a marketing tool. In general, these lenders will not charge you additional costs or interest when applying for a tax refund loan.

Tax Refund Repayment

Taxpayers are expected to repay their tax refund advances because this money is not given for free. You are required to pay the money borrowed and tax preparation fees. Some lenders are known for selling additional services to earn extra money on top of the preparation fees. Taxpayers who use payment cards might also be required to pay additional fees like monthly fees. A credit card can charge you a high interest rate and annual fees.

The Risks

Apart from paying high costs, it might be challenging to know how much you will get from your IRS. Miscalculation is one of the risks associated with a tax refund. This means that you might end up getting less money than you have borrowed when your tax preparer makes a mistake when calculating your tax refunds. Sometimes the lender can withhold your funds is you do not pay off your loan.