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Tips for Getting a Tax Refund Loan
If you owe money at the end of tax season, it can be difficult to come up with all the funds at once. Check out these 4 tips for securing a tax refund loan for help.
If you haven’t saved up enough money to get you through the next few weeks until it comes in the mail, you might seek out a loan. A tax refund loan is a loan that your tax preparer might be able to offer you to get you through the period until your refund arrives.
If you’re new to a tax refund loan, here are 4 ways that you could get one this year.
1. Pay Off Debts
No matter what type of loan you’re trying to get, your credit history is going to be scrutinized. If you’ve got a load of outstanding debts, the last thing you need to take on is another loan.
However, we’re not always in a position where we can choose whether or not we want to take out a loan.
Sometimes it’s what we have to do to get by.
Before you take out any major loan, make sure that you pay off as much as you can of old debt.
If you owe a few hundred on a few accounts, before you take out a few thousand in a tax refund loan, pay off those small debts.
If you’re going to be granted a loan, your lender or tax preparer will see that you have a history of being responsible with money that they can rely on.
While it might not be possible to entirely dig yourself out of debt, it’s essential that your credit history shows that you try. A credit history of steady payment looks better than one that relies on delinquency to inspire action.
2. Fix Credit Score Errors
Your credit score will be taken into account when you’re being assessed for a tax refund loan.
Make sure you do the work of scrutinizing it before anyone else can. You need to fix your credit score before you’re judged by it.
The best way to do it is looking for errors. If you have a relatively common name, there could be accounts on your record that you’re not responsible for. This can be a difficult problem to solve, but if you can start the process of having them removed from your account, you can improve your score.
If you paid off an account that is still marked as owed or delinquent on your record, you need to step in and do something about that. Your credit score shouldn’t be dragged down by a mistake made years ago, especially if it’s been resolved.
So many confusing channels all linked together are bound to get a few things wrong.
3. Be Aware Of The Costs
Getting a tax refund loan can be a windfall if you’re trying to make it through a difficult month without enough cash. It’s an especially tough decision if you took a day or two off of work to handle your taxes in the first place. However, a tax refund loan can come with its own set of costs.
Some tax preparers will allow you to take out a refund loan from them if they’ve just filed your taxes and have seen how much you’ll be getting back. They know the inner workings of your finances, so they can fairly assess how worthy you are of a loan. However, they’re not obligated to give you a loan or even cut you a fair deal.
Taking out a loan with your tax preparer doesn’t assure you that your refund is going to arrive any sooner.
If you’re expecting $3000 and took out a $500 loan from your tax preparer, they’re allowed to charge you the interest they determine is fair. Depending on how quickly you’re going to get your refund back, this could end up costing you.
Filing your return with a tax preparer than asking them for a loan doesn’t mean the IRS is going to process your return quickly. They could hit a snag and all the while you could be paying penalties for your advance. The fees could stack up quickly depending on the terms of your loan and you might fall into debt.
4. Try a Title Loan
If you’re looking for an alternative to getting a tax refund loan, a title loan offers you many of the same features while being a little more reliable.
What makes a title loan so lucrative for lenders is that people are willing to potentially hand over their car for the loan they need. This is a little bit like playing with fire, but for some people, at certain times, it’s what’s necessary.
Asking about preseason tax loans isn’t a bad idea, but it’s not always an option.
The only problem is, you can’t be late when you’re repaying your title loan. You’ll be responsible for the full price plus some interest but if you build up other fees, it could start costing you a pretty penny. If you show up even a minute late with your payment, you could end up losing your car.
This might sound like a harsh practice but it’s perfectly legal in the world of title loans. This is a tricky prospect because if you rely on your car for work, you can’t gamble with potentially losing it. Think carefully before you sign on to any kind of loan, especially one that has unreasonably high potential for disaster.
A Tax Refund Loan Can Save Your Hide
For some people, getting a tax refund loan can keep them from getting evicted or allow them to get a much-needed vacation. No matter what your situation is, you shouldn’t be afraid to ask for a tax refund loan. They can come in handy when you’d least expect it.
If you want to improve your budgeting so you don’t need another loan like this next year, follow our guide to get your money in order.