It’s the start of the year and that time again to file your taxes. But did you know that you can apply for a tax refund loans or advance during this time of the year? What are tax refunds, you ask? A tax refund is like a reimbursement by the government in case you overpaid your taxes. The US treasury estimates that around three-fourths of taxpayers have overpaid taxes.
A large tax refund can feel good, and it’s nice to see it come back at the end of the year. However, the only downside is that tax returns are slow, taking nearly a month, and even longer if you request the refund by mail. If that’s the case, consider the tax refund advance option to get it even faster. It is similar to a loan that can get your funds in your account even faster.
But how similar are they to traditional loans? That’s what ATC Income Tax here wants to answer. Being at the forefront of income tax services in Atlanta, Decatur and Milwaukee, we’ll cover how tax refund loans compare to traditional loan services and what advantage you can expect from us. So, let’s not wait any further and learn when refund loans will work out for you.
Understanding Tax Refund Loans:
Before we consider the differences between tax refund advances and traditional loans, Let’s take a closer look at the former is exactly. Also referred to as tax refund loans, they are a service offered by tax preparation services. The loan is a great way to get cash on hand during the tax season, just after the costly holidays.The tax refund loan works by applying for a tax refund through a third-party vendor, usually a tax preparation company that files your taxes.
The tax preparation company collects crucial documents such as your ID and W-2 (if available) and other financial records to apply for a tax return from the IRS. Once done, they set up a bank account in your name to deposit the refund. As it will take around 21 days or more to get your refund application accepted, the service provider will offer you the requested portion of the refund amount.
Some services may charge a fee, but others may not or deduct it from the refund amount collected while providing the remaining amount back. This way, you get your requested refund portion quicker while not having to pay for the service.
Traditional Loans:
When we talk about traditional loans, we’re talking about loans that you take from private lenders such as banks. Depending on your financial needs, they can provide you with fixed loans.
Before the bank offers you the loan, they first run a check if you are eligible. Once approved, they proceed with the application process. Among the requirement criteria, the bank includes:
- A good credit score, typically over 620
- If you’re able to pay the minimum amount of down payment (if you’re buying a home)
- And have a debt-to-income ratio of less than 36%
ATC Income Tax Refund Loans Explained
- ATC Income Tax offers services a little differently than other tax preparation services. We provide tax refund advance services to provide you with loans for refund amounts as high as $6000 with our EASY MONEY Loan services.
- Plus, you could qualify for an additional advance of up to $500 with the ATC Bonus (0% APR, Zero Fee in-house advance).
- You can avail 25%, 50%, or even 75% of the tax refund amount, possibly with 0% APR (if applicable). Once you apply for a tax refund advance and provide the necessary documents, we’ll start working on your application.
- Rest assured, we ensure the information we send is 100% accurate. Otherwise, you can expect a complete refund. Once sent, we’ll provide you with the requested portion of the loan amount in minutes.
In addition, once the IRS approves your refund application, apart from the processing fee and APR cost deducted from the refund amount, we won’t touch a single penny and send the remaining refund amount back to you. This way, you’ll enjoy tax refunds without paying for advance services.
Comparative Analysis Between a Tax Refund Advance and a Traditional Loan
Tax Refund Advance |
Traditional Loan |
Requirements |
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| The tax refund loan eligibility criteria are quite straightforward and lean. It usually requires identity verification and being aligned with underwriting standards. This simplifies the process and makes it more accessible. | Traditional loans often require multiple documentation, such as proof of income, good credit history, income statements, and collateral. This process is quite time-consuming and isn’t accessible to those with low credit history. |
Approval Time |
|
| Tax advance approvals are swift. You can receive funds in just minutes after the tax loan gets accepted. | Traditional loans, whether taken from a bank or a private lender, often have a prolonged approval process, which may involve several visits. It may not be suitable for urgent financial requirements. |
Flexibility and Customization |
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| You can receive 25%, 50%, or 75% tax refunds. Tax preparation companies provide customizable loans for your specific financial requirements. | Traditional loans are fixed, which may limit the borrower’s ability to tailor the loan amount. This lack of flexibility might not suit everyone’s financial situation. |
Credit Impact |
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| Taking a tax advance loan has little to no impact on your credit score. This feature ensures that you receive funds even with a low credit history. | Traditional loans involve a comprehensive credit check, impacting your credit score. This can be a concern for individuals with below-average credit history. |
Zero-Cost Options |
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| For $500 or $1,000, some tax preparation companies offer zero-cost options with a 0.00% APR. This unique feature ensures that your refund amount isn’t debited for APR costs. | Traditional loans typically come with interest and fees; even smaller loans may have associated costs. This makes borrowing smaller amounts less economical as you may have to pay more when the repayment period starts. |
Risks and Considerations
Now, although tax refund loans are economical, there are a few aspects that you should keep in mind before taking the tax refund advance from any tax preparation company:
- Make sure your documents are proper and valid. Otherwise, the IRS may not approve your tax return process. Double-check every document, even if you send the file through a tax preparation company.
- Ensure your W2 form is correctly filled with accurate information about your wages, especially if you are self-employed.
- Although most tax preparation companies might not charge any amount for their services, consider the APR. Normally, these services have a 35-plus APR, especially when filing a tax return above $1000. The APR amount will be deducted from the deposited refund amount.
How to Choose the Right Option?
Now, depending on your needs, it’s up to you to decide which option suits you. But if you are confused, here are some pointers to help you choose:
1. Assess Your Financial Needs
Consider the reason for your funds. Do you need to cover immediate expenses, or have you sought to accomplish a long-term financial goal? Understanding these needs will help you effectively choose a loan option that aligns with your objectives.
2. Evaluate Urgency
Assess financial requirements urgency. If you need funds quickly, especially during tax season, it’s better to go for income tax services in Decatur to assist you.
3. Examine Eligibility Criteria
Take a closer look at the eligibility criteria for both loan options. Tax advances have streamlined eligibility requirements, making them accessible to a broader audience. On the other hand, traditional loans have stricter criteria.
4. Compare Costs
Examine the overall costs associated with each loan option. Tax advances may offer zero-cost options for smaller amounts, offering a cost-effective solution. In comparison, traditional loans may have various fees, including service and interest.
Final Note about Tax Refund Loans and Traditional Loans
In the end, tax refund loans are great, especially if you have to catch up on bills during the tax season. It can provide you with short-term funds taken out from a portion of your tax returns. But if you consider them as an alternative to the traditional loan, then it’s up to you. Tax advances are different from traditional loans and prove to be a better alternative when it comes to getting funds when you need them urgently.
FAQs – Tax Refund Loans and Traditional Loans
What is a Tax Refund Advance?
A tax refund advance, often referred to as a tax refund loan, is a financial service allowing individuals to get a portion of their refunds before the refund is processed. Through it, you can get quick access to funds during the tax season.
How Does a Tax Refund Advance Differ from Traditional Loans?
Compared to traditional loans, the tax refund loan is a short-term solution with a faster approval process. It is an attractive option for those looking for immediate funds during the tax season.
What are the Benefits of Choosing a Tax Refund Advance Over a Traditional Loan?
If you choose tax refund advance from income tax services in Decatur, such as ours, you can benefit from rapid approval, zero-cost payment options, and additional bonuses. Please review our store to learn in detail what we offer. This may prove more convenient and affordable than traditional loan options.
Are There Zero-Cost Options for Smaller Amounts with Tax Refund Advances?
ATC Income Tax Services in Decatur offers zero-cost options for smaller tax refund advances. Loans in the lower cost bracket of $500-$1500 have zero costs to the taxpayer. Reach out to us to learn more about what we offer.
