Tax Refund Anticipation Loans in Georgia
Should you pay to borrow money you've already earned?
Besides daffodils and robins, another sure sign of spring is the tax preparation firm hyping "Rapid Refund," "Fast Cash Refund," "Express Money," or "Instant Refund." The seasonal promise to deliver your state and federal tax refunds immediately, (if not sooner!) comes at an unexpected and hefty price. You should know that the tax preparer is not lighting a fire under the IRS, he's signing you up for a high-cost loan, a Refund Anticipation Loan (RAL).
RAL: further evidence that "haste makes waste"
RALs allow you to borrow against the amount you estimate the government will refund once it has processed your tax return. Of course, there's no guarantee the IRS won't make some corrections when it reviews your 1040, refunding you less than anticipated or nothing at all. But while your refund may not be a sure thing, the high interest and fees attached to your RAL are. Before you sign on for a RAL, you've got to imagine how difficult it will be to pay off if that refund doesn't come.
When you look closely at what an RAL costs, you understand why tax preparation firms market them so aggressively. RALs are a great deal — for the company! Similar to payday loans, the fees usually run between $30 and $90, and may be subject to additional "administrative" or "application" fees of $28 to $59. All that can add up to an Annual Percentage Rate (APRs) of 60 percent to more than 1,700 percent APR. Gouging you with fees rather than interest may make these loans legal, but they're far from a smart investment.
Find a better way to access your money
Your tax refund is money you've already earned, and it's already lost value during the time the government was holding it at zero percent interest. Don't devalue your money further with a bad loan agreement. Stay away from RALs and save money with this simple tax-time advice:
- File your taxes as soon as you get all our W-2s. Early filing means early refunds.
- File your taxes electronically to speed the process. Request direct deposit and you may see your refund in as few as 10 days.
- You shouldn't take on a new debt to cope with your old ones. Before your lender repossesses your car or other belongings, ask for flexibility. Your lender isn't going to take an extreme step if you show you've got a refund payment coming in short order.
- Many taxpayers delay filing because they're intimidated by the forms. Seek out reputable organizations, like AARP Tax-Aide or Volunteer Income Tax Assistance (VITA), that offer free tax assistance.
Contact Atlanta DebtStoppers and avoid debt traps at tax time
If you've fallen victim to a loan scam and are in debt over your head, get professional assistance from DebtStoppers. Call for a free consultation and debt evaluation, at 404.750.4706 or contact our Atlanta office online.