Refund Anticipation Loans Research Paper Example | Topics and Well Written Essays - 2500 words - 1

Refund forethought Loans - Research Paper ExampleIn spite of the high fees associated with RALs, most of those coming from the poor families are the ones who usually apply for it. There is an on-going battle between the government, the consumer advocates and measure preparation companies on the continued offering of Refund Anticipation Loans.A refund anticipation loan is a type of short-term loan that is applied by a taxpayer, who wants an early claim on his tax refund. The amount that is acquired through the loan will be re compensable by the taxpayers anticipated tax refund. It may also be called Rapid Refund or Instant Money. A contract is provided by the financial institution to be signed by the taxpayer that serves as an assurance that the loan will be paid back through the taxpayers tax refund (Refund Anticipation Loan Fraud).Common interest rates for RALs start from 50% up to over 500%, the basis of which is the length of the time that is needed to process tax forms at the I nternal Revenue Services (IRS), that is According to the substance for Responsible Lending. Although this type of loan has been claimed as a way for taxpayers to have their tax refunds earlier in their pockets, more often than not it is advanced lone(prenominal) for bonny a few days or less as compared to the actual date that the IRS releases the tax refund (Tax Refund Resources for Consumers).RALs hallow taxpayers the opportunity to get their tax refund at a sooner date and be able to use the money earlier rather than custody for a couple more days. Even so, problems occur when someone opts to use a refund anticipation loan. Basically the lender knows that the money borrowed will be paid no matter what since the guarantee is the taxpayers tax refund therefore, it is considered as a safer type of loan compared to the other types, but then risking everything just to get the money sooner seems to not sound good at all (Pritchard).