Are you expecting a tax refund and need cash fast? You might be considering a Refund Advance loan, especially if you’re using tax preparation software like TurboTax. Before you jump in, it’s smart to Compare Online Prices and understand exactly what you’re getting into. This guide breaks down the details of Refund Advance loans, helping you make an informed decision.
What is a Refund Advance Loan?
A Refund Advance loan is essentially a short-term loan based on your expected federal tax refund. It’s not your actual refund, but rather a loan issued by banks like First Century Bank, N.A., or WebBank, which partner with tax preparation services. These loans often boast a 0% APR and $0 loan fees, making them seem attractive. However, it’s crucial to understand the terms and conditions.
Eligibility Requirements for a Refund Advance
Not everyone qualifies for a Refund Advance. Here are the key eligibility criteria you need to meet:
- Refund Amount: You must anticipate a federal refund of $500 or more.
- Address: Your physical address must be on your tax return and located within the United States (not a US territory), and cannot be a PO box or prison address. Residents of IL, CT, and NC are currently ineligible.
- Age: You must be at least 18 years old.
- Tax Return Type: The loan is not available for returns filed on behalf of a deceased person or certain IRS forms like 1310, 4852, 4684, 4868, 1040SS, 1040PR, 1040X, 8888, or 8862.
- Income Documentation: You generally need to have received Forms W-2 or 1099-R or be reporting income on Schedule C.
- E-filing and Bank Account: You must e-file your federal tax return through TurboTax and have or open a Credit Karma Money™ Spend (checking) account with MVB Bank, Inc.
Loan Amounts and Repayment
If approved, you won’t get to choose your loan amount. Instead, it will be one of the pre-set amounts: $250, $500, $750, $1,000, $1,500, $2,000, $2,500, $3,000, $3,500, or $4,000. The loan amount is also capped at a maximum of 50% of your anticipated federal refund.
Repayment is straightforward: it’s automatically deducted from your federal tax refund. This means the refund you eventually receive will be less the loan amount. You’ll only know if you’re approved after the IRS accepts your e-filed tax return.
Fees and Other Potential Costs
While Refund Advance loans advertise 0% APR and $0 loan fees, be aware of other potential costs. If you choose to pay for TurboTax services using your federal refund, separate fees may apply. Paying with your refund is not mandatory to get the loan, and additional fees might be charged for other optional products or services offered. It’s important to compare online prices for tax preparation services and payment options to understand the total cost.
It’s also worth noting that while there are generally no fees associated with the Credit Karma Money™ Spend account itself, it’s always wise to review their terms and conditions for any potential charges related to specific transactions or services.
What Happens if Your Refund is Less Than Expected?
One key feature of this loan is that you are generally not required to repay any remaining balance if your tax refund is insufficient to cover the loan. However, if your loan isn’t fully paid off, you will likely be ineligible for a Refund Advance in the future. You might also be contacted to remind you of the remaining balance and given options to repay it if you choose to.
Making an Informed Decision: Compare Your Options
Refund Advance loans can be a quick solution if you need immediate access to funds while waiting for your tax refund. The 0% APR and no loan fees are appealing. However, it’s essential to compare online prices and consider if this is the best option for your situation.
Think about these points when you compare online prices and options:
- Do you really need the money immediately? Refunds are typically issued by the IRS within 21 days of e-file acceptance. Is waiting a few weeks a viable alternative?
- Are there cheaper alternatives? While the Refund Advance has no loan fees, consider if other short-term financial solutions, or even delaying a purchase, might be more cost-effective in the long run.
- Have you compared tax preparation costs? If you are paying for tax preparation services, compare online prices of different software and services, and understand all associated fees, especially if you plan to pay using your refund.
By carefully considering your needs and comparing online prices and alternatives, you can make a financially sound decision about whether a Refund Advance loan is the right choice for you.
