Payday Loans vs. Tax Refund Loans
MyCashNow wants all of our customers to be well-informed about the advance cash industry. This includes passing along the latest news and information when it comes to alternative types of loans. One of those loan types is the tax refund anticipation loan. At first glance, the tax refund loan may seem like an easy way to get cash quickly, but for most people, this is not the best alternative.
What is a Tax Refund loan?
A Tax Refund loan is also known as a refund anticipation loan. This is a loan where clients borrow against what they expect they will receive after they file their taxes for the year.
This is how a refund anticipation loan works:
A customer receives a loan with the anticipation that the refund amount
they receive from filing their taxes will cover the cost of their loan
and associated fees. This appeals to customers, because they are able
to get their money immediately without having to wait for the IRS to
deposit it or send it in the mail. The danger in this is when the amount
of the tax refund is less than the total of the loan and fees. This
creates a problem for customers when they have to pay back additional
amounts that they did not anticipate.
The IRS may be restricting refund anticipation loans.
MSNBC, Reuters, BankRate and Forbes have all reported on the strong possibility that the IRS may go ahead with plans to restrict tax refund anticipation loans. The IRS is worried about the strong possibility that these loans could encourage fraud. Consumer groups have voiced concern that unscrupulous tax preparers might be tempted to inflate refund amounts in order to collect higher fees. If this proposal from the IRS goes into effect, it would prevent tax preparers from providing tax return information to companies that provide tax refund loans.
What is the better choice for you? Payday loans!
When you know that you have money coming in, and you are looking for a cash advance, getting a payday loan is really the best option. There are many differences between a payday loan and a refund anticipation loan. When you take out a payday loan, you know the actual amount of income that you have coming in. This gives you a much better idea of how much you can borrow and pay back. The tax refund loan puts the customer in a dangerous situation. If your refund is lower than your loan amount, then you will find yourself in debt for the remaining loan amount and fees. This could begin a cycle of debt that gets harder and harder for you to break.
According to BankRate.com, another problem with a tax refund loan is that many of the individuals that take out refund anticipation loans don’t have bank accounts. MyCashNow requires that each of our customers have an active bank account and at least $1000.00 in monthly income. This helps our clients by making it easier for them to pay back their cash advance.
When a person decides to take out a tax refund loan, a bank account is opened for the sole purpose of having an account to deposit the loan. Since tax refund loans do not require a previous bank account to be in use, this causes problems for the borrower. By the time they realize that they are unable to pay back the loan, they are already caught in a financial trap that could take years to pull out of.
As part of MyCashNow’s continuing process of watching out for the best interests of our clients, we wanted to let you know about the potential for negative effects that can be associated with a tax refund loan. If you are looking for a cash advance, then your best option is a payday loan from MyCashNow. If you have any further questions about payday loans and what options exist for you, feel free to call MyCashNow at 1-866-398-CASH.
REMEMBER: New customers get 50% off of their initial finance charge! Call or Apply now!
