Short-Term Loans: A Cash Advance, Payday, and A Tax Refund Loan?

Getting a cash advance is pretty easy when you use a direct lender. During the holiday season, there is another opportunity for quick access to cash. Many tax preparation companies offer loans against your tax return. It sounds like a good way to get fast cash, right?

Once I heard about these tax loans, I wanted to learn more about them. Since I write about cash advances and payday loans quite often, I was intrigues by this other option for fast cash. During this holiday season, there are more advertisements for tax refund loans. It is interesting that the few company websites that I checked included the word fee in their service description but there were no numbers included to let me know how much. Here is what I did learn about these tax refund short-term loans.

*The latest paycheck stub will be used to estimate your return.

*If there is a lien against you, back child support or taxes owed, you will not qualify.

*Legal IDs

*The phone number connects you to a call center.

*These representatives can answer basic questions, tell you what documents you will need to apply, and connect you to a local office.

*Pre-approval from the call center is not a guarantee of loan approval.

I found it very interesting that there were no fee prices or APR's attached to the information on the website as direct cash advance lenders must disclose. It's a short-term loan with high interest and fees that does not conform to a cash advance or payday loan regulations. Interesting.

After two phone calls to the same call center, and raining my tone a tad, I finally got an answer from one of the major tax preparations sites. Their service is limited to a loan of $1000 which is loaded on a prepaid card. The customer representative did not understand what I meant when I asked what the fees for this loan would be. I mentioned that every other company that lent money would not do it for free; she then told me that there was an annual service charge of $45 and an APR of 36%. I didn't go to the office to find out if there are any more fees attached to this loan. The 36% APR was enough to tell me that realistically, these short-term loans are not much different than regulated ones by a different name.

The IRS does not promote these refund loans. Electronic tax returns will be accepted in January. If you can hold on another month, you can get your money directly from them at no additional costs. No need to worry about repaying the loan with a high interest rate to eat away at the rest of your refund.

Whether you are looking for fast cash in the form of a cash advance online from a direct lender or looking to use a refund loan service from a tax preparation company, you will want to be aware of all qualifications and costs associated with the loan. You may feel the pinch to obtain money quickly, but if you can wait to get your taxes back in another month, you may find yourself in a better financial situation than if you had taken out the refund loan.