Car Title Loans vs. Anticipated Tax Refund Loans
What is an Anticipated Tax Refund Loan?
Annually many Americans find themselves needing their income tax refund now causing them to obtain an anticipated tax refund loan as a quick and simple method to get their tax refund quicker. Anticipated tax refund loans are essentially a short term payday loan made against their anticipated income tax refund. The consumer typically applies for an anticipated tax refund loan through a company that prepares tax returns. The anticipated tax refund loan amount is determined by the expected amount of their tax refund.
One of the many dangers with obtaining an anticipated tax refund loan is that the lender may intentionally increase the expected income tax refund amount in order to increase the amount of fees they charge. This creates problems for the consumer when their expected income tax refund they actually receive is less than anticipated since the lender has already contracted for and deducted their fees from the consumers income tax refund. Additionally, this puts the consumer at risk of being audited by the IRS for filing an incorrect income tax return. These and other risks are reasons the government is considering legislation to restrict anticipated tax refund loans because they promote fraudulent activities.
