About the Author
Joe Planto
Joe is a small Internet business owner and lectures as an adjunct professor at his local community college. . His wife is also a restaurant owner. Joe holds a BS is Computer Science and an MBA. Check out his web site for Food Industry workers at
What could be better than getting an advance on your tax refund from the IRS? Think of how you could use the money right now! I bet the payday loans and Tax Refund Loans as sounding good. Well, you better give some thought to the fees you are paying for that advance.
America is a capitalist society and home to many creative people. You can even find them in the field of tax preparation, a bland area if ever there was! The interesting service in this case refers to loans being made by tax preparers. There is nothing inherently wrong or illegal with such loans, but it is a case of buyer beware. The fees can be high and hidden.
The loans at the heart of this article are called a couple of different things. The most direct name is a tax refund loan. Many places will call them a “pay stub” or “pay day” loan, in reference to the use of paycheck stub information to figure out how much money to loan out. While these loans are legal they come with many fees.
Short term loans are inherently expensive. Why? The financing party doesn’t have a lot of time to watch interest accumulate and collect it as would be the case for a long term loan (home mortgage and cars). Instead, they need to find a way to make money on the loan quickly. They do it with fees. In the pay day loan business, the fees often equate to 10% or more of the loan. That is a pretty high percentage for loaning you money for a couple of months.
Before I go any farther, it is important to understand there is nothing wrong with lenders doing this. They have every right to make money and every right to charge you fees. The burden is on you to determine whether you really need that money now or if you can hold off a few more weeks. If you need it now, then why don’t you go ahead and file your taxes early? It may seem like a shocking idea, but there is nothing prohibiting you from doing so. The IRS will pay your tax refund as soon as they get your filing. So the sooner you file the sooner your fee free check comes to you.
At the end of the day, it is your decision as to whether you want to take a loan against your taxes. Some will and some will not. Whatever your decision, just make sure you read the fine print and understand all the fees you will have to pay.
Published by Joe Planto on January 10, 2007 01:01 PM
