Should you get a tax refund loan?
Liberty Tax offers easy advance loans in partnership with Republic Bank & Trust Company. Your funds will usually be available within 24 hours of the acceptance of your tax return, but may take longer if you choose for your funds to be directly deposited into your bank account.
If you are in dire need of funds to cover an emergency expense, such as a medical issue, and you absolutely cannot wait or it may end up costing you more if you do wait, then a tax refund loan may be an option worth considering.
In general, however, a tax refund loan is not worth the substantial fees you have to pay to get what will only be a portion of it in advance, said Paul T. Joseph, an attorney, CPA and founder of Joston, Mich. “The costs associated with a refund loan are similar to those of payday loans: Both have interest rates that range from approximately 18% to over 100%,” he said. “Those costs are typically much higher than home equity loans or signature loans available through a credit union, payday Greenhills OH which are cheaper alternatives for obtaining a lump sum of cash.”
If you do decide to get a refund loan, you must repay it upon receipt of your refund. You ount of the loan in some cases, or the loan proceeds may be wired into your bank account directly. “Of course, there are fees associated with both these scenarios,” Joseph said. “If you decide that you need a refund loan you should inquire as to what the total cost and fees will be to you.”
Tax refund loan alternative options
If you find the associated fees and costs of a tax refund loan are too prohibitive for you, consider these alternatives to a tax refund loan.
Depending on your credit score and the amount you need, a personal loan can be an option . Some lenders offer loans starting at $1,000, without any restrictions for how they can be used. A personal loan is unsecured, meaning you don’t have to assume the risk of losing your home if you have difficulty paying it back on time. Your interest rate will largely depend on your creditworthiness.
A credit card can be a viable option, as long as you shop around for the best offers. If you have a high credit score, you may be eligible for low interest rates or even 0% APR introductory offers. If you can pay off your credit card before the promotional period ends, you may end up paying no interest on your balance. However, you run the risk of paying high interest and possibly deferred interest if you don’t manage to pay off your balance in full before the introductory period is up.
Payday loan alternatives
Another alternative to the tax refund loan is the payday alternative loan offered by some credit unions. Interest rates for these loans typically range between 18% to 21%*, though they can be higher. However, the funds issued through a payday loan generally do not exceed $1,000, and you must be a member of a federal credit union for at least one month in order to qualify.
How can I speed up my tax refund?
The best way to speed up the process of getting your tax refund is to file it electronically, and as soon as possible. Make sure you indicate that you would like your funds to be deposited directly into your savings or checking account, so you don’t have to spend additional time waiting for a check to arrive in the mail.