Signs of a Predatory Tax Refund Loan

Signs of a Predatory Tax Refund Loan


If you're expecting a refund this tax season, you may be tempted to use an "instant refund" or refund anticipation loan (RAL) this year. Before you or your family give your hard-earned money away, check out these four signs of a predatory refund anticipation loan. You'll see why most RALs are just a raw deal.



SIGN 1


HIGH INTEREST RATES

The annual interest rate of the predatory tax refund loan can be as high as 500%. These costly rates drain your hard-earned money.



SIGN 2


EXCESSIVE FEES

In addition to a high APR, bad tax refund loans are often loaded with unnecessary “administrative” fees.





SIGN 3


INSTANT CASH PROMISES

The idea of “instant cash” may sound good, but in reality refund anticipation loans only speed up the refund process by a few days.



SIGN 4


LARGER REFUND GUARANTEES

Be wary of any tax preparer that guarantees a larger-than-expected refund, particularly if such promises comes with more fees.



 

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