The word is out that Tax Loans are back! We’ve seen some negative comments regarding them, and it’s time to clear the water. We are strong believers that these will increase your business and also that they are worth the small lender fee it will cost you to offer the service for FREE to your clients.
The comparison of Tax Loans to Payday Loans is just comical. The fees associated with both of these are far different. Tax Loans will be free for clients up to $600. This is simply an advance on part of their refund in order to help them out if they need it. The remainder of their refunds can either sent via direct deposit or by check. Many people live paycheck to paycheck now, so one unexpected expense like a car repair, or illness can easily throw someone into a bad financial situation.
Payday loans seem to have a bad rap. Imagine what you would do if you needed $400 to fix your car and didn’t have it. You had to get your children to and from daycare and yourself to your job to continue to support your family financially. If you had no relatives that could help you or no friends to count on…what would you do? There are more people than you would think in these situations. To these people payday loans mean the world. Then there are the fees, based on my research, it costs approximately $16 for each $100 that is lent. So, based on this scenario, the fees would total $64.
The important difference between the two are payday loans need to be repaid and if you aren’t financially able to pay them back in the allotted time, you could face a penalty. Tax loans are not based on income that wasn’t sufficient for these situations in the first place, they are based on additional income.
The prepaid cards have also been explained negatively. Let me clear this up as well. The Green Dot Tax Time Edition Prepaid Card can be used at over 24,000 free ATMS and has no monthly fee for 30 days after the card activation. If your clients want a tax loan the chances are they need their funds immediately. In which case they will likely withdraw these funds right away resulting in no fees for them.
We hope this clears up any misconception that you could have of tax loans and the details. If you have any concerns, please reach out to us and we will be happy to address them with you.
UltimateTax Service, Inc. is a professional tax software provider. We provide this information as a service to our clients and friends. The information we post is for your viewing and knowledge pleasure. We take all information we post seriously and stand behind what we post. However, information we post is not meant to be used as your sole position in tax cases.