How to Get a Refund Anticipation Loan

What it is

A refund anticipation loan, or RAL, is a short term cash advance made against a customer's anticipated income tax refund. The loans are offered at high interest rates that range from 40 to 700 percent APR. Refund anticipation loans speed up the refund process by as little as one week, compared to what consumers can expect by filing online and having their refunds deposited directly into their bank accounts.

Refund anticipation loans offer people fast emergency cash that can be used to pay overdue medical bills, credit payments, and other debts while they wait for the IRS to process their taxes. This process can take anywhere from three weeks to two months. Many refund anticipation loans cost consumers substantial amounts of money. For instance, a refund anticipation loan could be a 10-day loan with a $3,000 refund anticipation and a loan fee of $89. This is an annualized interest rate of 108 percent.

Who it's for

Refund anticipation loans are typically obtained by people who are in lower income brackets or people who need immediate funding or emergency cash fast. Refund anticipation loans can help people meet short term financial goals to pay the bills, arrange for minor car repairs, pay for medical attention or any number of other unexpected emergency costs. These loans are sold to people who are willing to pay a lot of money to receive their refund a few weeks sooner.

What you need to do to apply

In order to obtain a refund anticipation loan, interested applicants will need to contact a local lending institution and inquire about the different options and rates available. Personal and financial history, including a credit report, will need to be made available to the lending institution.

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