Tax advance loans are also known as tax refund anticipation loans (RALs). Less common than in the past, RALs are still available through Jackson Hewitt, H&R Block, Liberty Tax, and other independent tax preparation services.
What is a Tax Refund Loan?
RALs are an option to access your tax refund almost instantly, rather than waiting for the average three weeks processing time. Once the IRS has accepted your tax return, you can borrow against the funds from the tax preparation company immediately.
In most cases, once approved, you receive the funds within 24 hours. Approval is based on the tax preparation service that is preparing your tax return for a fee. The company will deduct repayments in full directly from your refund and issue you with any remaining balance.
Where to Find Tax Refund Cash Advance Emergency Loan Alternatives
For those who have been refused tax advance loans or need to borrow an amount in excess of their refund, there are various alternatives to Tax Refund Loans.
Personal Loans Personal loans can be in amounts ranging from $2,000 to $40,000. Repayments are set monthly, usually with a fixed interest rate.
Personal loans can be a safer and more manageable alternative to RALs. It usually involves a credit check, however. If your credit score is low, you ounts.
Installment Loans Installment loans can be the better option if your credit score is an issue. These products are structured in a similar way to personal loans-repayments are monthly and include principal and interest amounts.
Personal versus Installment Loans Installment loans differ from personal loans in that these don’t often involve a hard credit check. It makes them more accessible to poor credit score holders. Loan terms also tend to be shorter than personal loans, with repayments from 90 days to 7 years.
Payday Loans Payday loans are a quick fix if you’re looking for tax refund cash advance emergency loans. It usually requires no credit check, if you agree to make full repayment via your next paycheck. The loan term is usually no more than 30 days, with a 14-day average.
The downside of payday loans is that you’re left with a diminished paycheck following repayment. It may result in the need for another advance in the coming month, which can initiate a vicious cycle of living through pay advances.
Who can Qualify for Tax Refund Cash Advance Emergency Loans?
Anybody over the age of 18 can qualify for tax refund cash advance emergency loans, assuming they are expecting an imminent tax refund from the IRS. You must have your taxes prepared by the same tax preparation service and be able to verify your income adequately.
It’s also necessary to produce proof of a steady monthly income for the lender. $800 is considered the absolute minimum monthly income to qualify, with $2,000 per month being the average from most lenders. The higher your income, the better your chances of loan approval.
Aside from the minimum age and income criteria, individual details vary between lenders. Requirements will depend on the type of lending, the individual borrower, and the amount in question.
RALs almost always require that the borrower employs the tax preparation service to do their returns as part of the terms of the loan. Other requirements involve a minimum tax refund amount, income verification, and credit criteria.
Installment loan requirements are less stringent for those with poor credit. It usually comes with a higher interest rate, however. If your credit score is unfavorable, you will be subject to a more rigorous credit check and stricter parameters. In return, you are likely to receive a better interest rate, though.
Pros and Cons
There are numerous options available to those looking for tax refund cash advance emergency loans. All the options have various advantages and disadvantages to consider in comparison to other financial product offerings.
The main advantage of a RAL over other tax advance loans is convenience. You are essentially borrowing your own money, and there is no additional paperwork required for you to qualify. Full repayment is automatic as soon as your refund is processed, guaranteeing no long-term commitment to monthly repayments or interest fees.
The downside is that the amount you can borrow is restricted to the amount of your refund. Loan amounts are usually under $2,000.
Alternative methods of borrowing, such as installment loans or personal loans, vary the amounts borrowed, which can be up to $40,000. Structured monthly installments and fixed interest rates keep repayment manageable. It is a more substantial financial commitment, however, as you are tied to repayments over a longer period.
Tax Refund Loans With No Credit Check
Another benefit of a tax advance loan is that it often doesn’t require a credit check. Your tax refund is guaranteed by Uncle payday loan debt lawyer Greenhills Sam, so repayment is unlikely to be an issue. It can make tax refund loans an attractive option for those with poor credit scores who need to access funds quickly.
Lauren Ward is a content writer focusing on personal finance, real estate, and lending. Her work has been featured on Huffington Post, CBS News, and Kiplinger. She previously worked at the Federal Reserve Bank of Richmond as well as several national non-profit organizations. About us »