Debt Collectors Calling? Avoid The RAL!
At this time of year, millions of Americans have debt collectors calling and desperately need their income tax refund checks from the IRS.
Plan ahead so you can enjoy every penny of the refund you are due.
What Is A Tax Refund Anticipation Loan (RAL)? An Income Tax Refund Anticipation Loan (RAL) is a loan that is offered by certain tax preparation companies against their clients' income tax returns.
You sign over to the tax preparer your right to your refund, for a fee, and you get immediate cash in exchange.
The RAL was originally developed to avoid waiting 8-10 weeks to receive your refund check from IRS.
Improvements in computer systems and programs have shortened that waiting period.
By filing online, you can expect your refund money in as little as a week, usually between eight days and two weeks.
Why Avoid The Income Tax RAL? A RAL is similar to a payday advance loan.
They can both can provide immediate funds.
They both levy exorbitant interest rates and/or fees.
Most important...
both Income Tax RAL and advance payday loans should be avoided like the worst form of the plague! It varies between tax preparers/lenders, of course, but you can expect that most RALs will cost around 100%-200% APR.
For example, let's say your income tax refund will be around $3,000.
00 and the tax preparer charges you a fee of $200.
You can walk out the door with $2,800.
00 in immediate cash.
$200 might not seem like that much to pay in order to solve your immediate credit issues.
But consider this: If the tax preparer gets your refund money as repayment of the RAL in 14 days, that amounts to almost a 200% annual percentage rate.
Couldn't you do a lot with that extra $200? In 2009, $750 million in fees were paid for about 8 million RALs processed -- at a mean average of $950 in fees per return.
Shocking when you consider that, on average, the tax refund advance loan lasts only a week or two! Income Tax RAL Lenders Prey On Desperate People The sad truth is that lenders of these short-term, high-interest, guaranteed loans prey on desperate people who can least afford them.
Recently, I was astonished to read the comments after a blog post setting out the pitfalls of taking an Income Tax Refund Anticipation Loan.
Poster after poster commented that "I need money for Christmas presents -- how can I get this RAL?" Today, times are tough for many of us.
Perhaps your circumstances are dire.
Maybe you have debt collectors calling.
Perhaps your utility company is ready to turn off the electricity.
Maybe, like the commentors on the RAL post, you just want to have a nice birthday party or Christmas for your kids, to bring a little normalcy and joy into their lives.
If you are due a refund of hundreds or even thousands dollars, it might seem worth it to cash out fast and solve some of your debt and credit issues.
The pressure of debt collectors calling is enormous.
Consider Expert Debt Counseling Wouldn't it help even more to have an extra $75, $125, or $950 -- whatever fee your Income Tax RAL lender will charge? How much will change in your circumstances if you can wait just a week or two for your refund? If you have serious credit issues, the money you would pay in fees for the Income Tax RAL would be better spent on expert debt counseling and management.
Look for a credit repair site with good reviews, or a reputable local credit counselor to help you make a budget and work with your creditors.
With expert debt management advice, some of your stress will immediately wash away.
With a debt repayment plan and budget to live within your means, won't it be a lot more fun to plan the next holiday or party for your family, especially knowing you will get every penny due from your income tax refund?
Plan ahead so you can enjoy every penny of the refund you are due.
What Is A Tax Refund Anticipation Loan (RAL)? An Income Tax Refund Anticipation Loan (RAL) is a loan that is offered by certain tax preparation companies against their clients' income tax returns.
You sign over to the tax preparer your right to your refund, for a fee, and you get immediate cash in exchange.
The RAL was originally developed to avoid waiting 8-10 weeks to receive your refund check from IRS.
Improvements in computer systems and programs have shortened that waiting period.
By filing online, you can expect your refund money in as little as a week, usually between eight days and two weeks.
Why Avoid The Income Tax RAL? A RAL is similar to a payday advance loan.
They can both can provide immediate funds.
They both levy exorbitant interest rates and/or fees.
Most important...
both Income Tax RAL and advance payday loans should be avoided like the worst form of the plague! It varies between tax preparers/lenders, of course, but you can expect that most RALs will cost around 100%-200% APR.
For example, let's say your income tax refund will be around $3,000.
00 and the tax preparer charges you a fee of $200.
You can walk out the door with $2,800.
00 in immediate cash.
$200 might not seem like that much to pay in order to solve your immediate credit issues.
But consider this: If the tax preparer gets your refund money as repayment of the RAL in 14 days, that amounts to almost a 200% annual percentage rate.
Couldn't you do a lot with that extra $200? In 2009, $750 million in fees were paid for about 8 million RALs processed -- at a mean average of $950 in fees per return.
Shocking when you consider that, on average, the tax refund advance loan lasts only a week or two! Income Tax RAL Lenders Prey On Desperate People The sad truth is that lenders of these short-term, high-interest, guaranteed loans prey on desperate people who can least afford them.
Recently, I was astonished to read the comments after a blog post setting out the pitfalls of taking an Income Tax Refund Anticipation Loan.
Poster after poster commented that "I need money for Christmas presents -- how can I get this RAL?" Today, times are tough for many of us.
Perhaps your circumstances are dire.
Maybe you have debt collectors calling.
Perhaps your utility company is ready to turn off the electricity.
Maybe, like the commentors on the RAL post, you just want to have a nice birthday party or Christmas for your kids, to bring a little normalcy and joy into their lives.
If you are due a refund of hundreds or even thousands dollars, it might seem worth it to cash out fast and solve some of your debt and credit issues.
The pressure of debt collectors calling is enormous.
Consider Expert Debt Counseling Wouldn't it help even more to have an extra $75, $125, or $950 -- whatever fee your Income Tax RAL lender will charge? How much will change in your circumstances if you can wait just a week or two for your refund? If you have serious credit issues, the money you would pay in fees for the Income Tax RAL would be better spent on expert debt counseling and management.
Look for a credit repair site with good reviews, or a reputable local credit counselor to help you make a budget and work with your creditors.
With expert debt management advice, some of your stress will immediately wash away.
With a debt repayment plan and budget to live within your means, won't it be a lot more fun to plan the next holiday or party for your family, especially knowing you will get every penny due from your income tax refund?
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