It is that time of year again where people are racing to file their income taxes in anticipation of a nice cash refund!
The cool thing about tax refunds in today’s world of filing online you can get your refund in as little as a week, but yet people are racing right out and taking out a payday loan tax refund advance.
The risks are crazy for being able to get your money a week early, and many people end up paying these loan companies back up to 20 times the money they borrowed.
It is so easy to get caught up in this money trap and almost impossible to get yourself back out of it.
All of a sudden you start seeing these ads online, on TV and on the radio telling you that if you have the paperwork on your return you can get instant cash! Up to $1500.00 the same day deposited into your checking account!
Run Forrest Run!
Let’s take a look at just what happens the minute you do take out one of these advances.
You might want to sit down!
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Check out our Payday Loan Repayment Plan! ]
Bye Bye Money!
Think about being able to get your tax refund money early without waiting for it!
Pretty cool idea you say? Well, let’s weigh the risks versus the benefits of taking out one of these loans for this purpose.
- Instant Money, usually the same day
- Defaulting on the loan leading to huge debt
- Incredible interest rate
- Chance of taking the option to extend the loan
- Extending the loan multiple times
- Taking out additional loans to cover current loan payments
- Defaulting and receiving threatening and harassing collection calls (See our post on How To Deal With Payday Loan Collectors Who Threaten You)
- Ruined credit from defaulting on loan
As you can see the risks outweigh the benefits and it simply is not worth the risks involved to get your money a week or two earlier than if you waited for the refund itself.
And the refund comes without an interest charge!
These companies actually drool over your money this time of year and can not wait for you to contact them for one of these loans.
They know the average person ends up extending their loans at least four times on average before they retire the loan, and this means huge profits for these companies.
Why would you want to help make them rich?
They also know that the default rate on these loans is closing in on 50 percent, and this is where they really jack you up!
They also understand how promising you instant cash will lure you into their trap with your eyes wide open because who can turn down instant money, right?
Take a look at this video from 2009. It has gotten worse since then but the numbers still hold true. The Refund Anticipation Loans still exist and they have been joined by payday loan tax refund advance loans, and the interest is actually higher today than it was when this video was created!
Pretty crazy stuff!
This was 2009, and the hopes of capping the interest and even outlawing these types of loans are dimming.
It seems there is big money in congress backing these loans and making it impossible to take action against them.
This is reason enough to avoid these kinds of loans at all costs!
Most people who get caught in these traps have never had any experience with these companies and the lure of instant money is just too much temptation when in reality waiting for your refund makes all the sense in the world.
Do yourself a favor and wait for that tax return, so you will not have to pay it back 10 fold!
If you already have been trapped by these companies and are in need of help with out of control payday loan debt please see our Payday Loan Repayment Plan page for more information on how we can help you with that!
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