Getting a tax refund loan: Fact vs. Fiction (2024)

FAQs

Getting a tax refund loan: Fact vs. Fiction? ›

Fiction – There's a cost to apply for the Refund Advance loan. Fact – There are no loan fees or finance charges. Plus, the money you receive is yours at 0% interest.

Bottom line. A tax refund loan can be a convenient way to get cash quickly when you're filing your taxes. It's typically easy to get approval, and you can find a provider that doesn't charge interest or fees. Still, it's wise to evaluate other options before you borrow against the money you don't have on hand yet.

If it would cost you more to wait for the money.

If you're paying high interest rates on debt now and need your tax return to get out of debt, using a loan to clear the debt quickly could save you cash.

Secondly, a refund advance may cost you, even if it's advertised as 0% APR. There could be hidden fees, including a requirement to pay for tax filing services, which can be pricey. Plus, some services may charge high interest rates, making this a more expensive type of loan.

You will not be eligible for the loan if: (1) your physical address is located outside of the United States, a US territory, a PO box or a prison address, (2) your physical address is in one of the following states: IL, CT, or NC, (3) you are less than 18 years old, (4) the tax return filed is on behalf of a deceased ...

Con: Traditional Tax Refund Advance Loans Are High-Interest Debts. Of course, paying off high-interest debt only makes sense if the loan is a low-interest debt. Traditional refund advance loans often carry origination fees or other fees that turn them into high-interest loans.

You're taking on risk.

Like all loans, RALs come with risk, including an increased debt burden if your refund is denied, delayed or lower than expected. As costly as RALs can be in the short-term, they can be devastatingly expensive over the long-term should anything go wrong with your refund.

Refund Advance is a loan provided by First Century Bank, N.A., Member FDIC, not affiliated with MVB Bank, Inc., Member FDIC. Acceptance times vary. You could get money in seconds, most customers receive funds within 4 minutes of acceptance.

Tax refund loans, also called "refund advances," let you access your refund early. The tax preparation company lends you money that is repaid with your tax return. Some loans are zero interest, while others include interest if you want the funds before 2024.

Fact – While not everyone is approved, the Refund Advance loan program at H&R Block has high approval rates. To be approved, you must apply and meet certain eligibility requirements, (such as ID verification and a sufficient expected tax refund amount), as well as meet the lender's underwriting requirements.

Can I get a tax refund loan after I filed my taxes? ›

Many tax filing services will also offer you a tax refund loan after you file with their service. Tax refund loans typically only last a couple of weeks – just long enough for the IRS to process your tax refund.

Refund Advance has $0 loan fees, 0% APR, and no impact to your credit score. If approved, you'll typically receive your Refund Advance within 4 minutes of the IRS accepting your e-filed return.

What are the approval requirements for Emerald Advance℠ Loan? Loan amount and approval are based on assessment of your credit worthiness. Both credit and non-credit information, such as credit history and ability to repay, are considered in the loan decision.

You might qualify for a tax refund advance loan even if you have poor or fair credit. Unlike other types of credit (like credit cards or personal loans), you won't have to worry about paying higher interest charges if you have less-than-perfect credit.

You owed the U.S. Government or your State. You had debt enforced by a State such as, but not limited to, child support obligations, past student loans, tax liens, and any other payments owed to a Federal or State agency. You did not pass the lender's final evaluation. Subject to review of third-party information.

Here's how it works: First, the affluent individual or family “buys” an asset with potential to grow over time. Next, rather than selling these assets when they need funds (which would require them to pay capital gains taxes), they “borrow” against them using the asset as collateral.

Lenders rely heavily on the ability to obtain tax returns from the IRS to verify the borrower's financial status. In its January 2nd statement, the IRS recommends that, if tax transcript information is required by a lender for other than a mortgage loan, such is requested directly from the taxpayer.

By law, employers withhold taxes from your paycheck. What you may not know is that if enough taxes are not withheld from your paycheck throughout the year, you, the employee, will likely owe the IRS when you file your tax return during tax season. This is also known as "under-withholding."

Currently, wealthy households can finance extravagant levels of consumption without even paying capital gains taxes on the accruing wealth by following a “buy, borrow, die” strategy, in which they finance current spending with loans and use their wealth as collateral.