Advice on Using a Refund Anticipation Loan during a Financial Emergency

Tax refunds help millions of Americans each year financially. Filing an accurate paper tax return, which we do not recommend, should yieldits appearance in six to eight weeks from the date the IRS received your file.   For the recommended way to file a tax return, which is electronically, you will receive the tax refund in typically 3 weeks.  There are additional factors that may effect this amount of time as well, however if you are waiting on a tax refund and have a financial problem that needs to be taken care of using your tax refund, this time can seem like an eternity, and this problem may grow significantly worse if it isn’t taken care of in a timely manner!  That is why a solution has been created for this situation, and it is called a tax refund anticipation loan or tax refund loan.

What exactly is a refund anticipation loan or tax refund loan?

A refund anticipation loan (RAL) is a loan provided by lenders that are backed by the anticipated federal income tax refund you will be receiving in the future.  The process for acquiring these loans is quite straightforward, as the lender loans the amount needed plus any charges and interest rate expenses. The amount borrowed is then paid back later using the tax refund received.

What are the costs associated with tax refund loans?

These costs typically vary from one lender to another, but the one constant with all RAL’s is a high interest rate.  However, is a RAL is used correctly, and paid back on time, it is a tool that can save you significant money, time, and energy!  This is because RAL’s are short-term solutions for financial emergencies!  Finding the exact costs, can be found when you apply for this product.

Here are some of the most important things to consider with getting a RAL

Here are some of the most important things to know and consider when looking to get a RAL.   The top things that need to be considered include:

1. Interest: the interest expense is likely to form the cost of getting a refund anticipation loan.  Most of these loans carry large interest rates, but are paid back in a quick timeframe, so the cost can be significantly less than letting the financial emergency, that these loans are usually gotten for, grow.
2. Requirements: There are a few requirements when getting this product which include:
   1. Being a U.S. Citizen
   1. Be at least 18 Years of Age
   1. Have a Bank Checking Account
   1. Be Receiving Future Income i.e. Your Tax Refund
3. Finding the best place to get a tax refund loan: Looking online or working with your tax preparer when getting a tax refund advance is the best way to go about finding the best option for it.  The most recommended online provider is tax refund loans.

Final thoughts and conclusion about tax refund anticipation loans

All in all, a RAL can be a very helpful tool during a financial emergency as a last resort.  However, there are many other options that you should consider first that can save you money.  For example, asking friends or family for help or a loan, using a credit card, and tapping into an emergency fund are some options you should try before getting a tax refund advance.  So if you have a financial emergency, and there are no other options, a RAL can be a great financial tool!

Dealing with unexpected bills

No matter how diligent you might be when it comes to your finances, the risk of an unexpected bill is ever-present in the background. Perhaps you moved home many years ago and there was an error when settling a cable account but you’ve not received the correspondence. Or maybe you’ve been hit by an unexpected need to replace an essential item, such as a phone or a laptop, following accidental damage that cannot be repaired.

Whatever the root cause of your new-found unexpected bill, it’s vital that you respond to it and make sure it doesn’t morph into a more pressing concern. But how can you do that if you haven’t planned for the expense? This article will share some top tips on how to help tackle a financial curveball as it comes your way.

Reduce your outgoings

The simplest way to open up more cash is to reduce the amount that you’re currently spending. In some cases, this might be simple yet painful. If you now spend a significant amount of cash on eating out or picking up lunch while on the go, for example, you could consider cutting out this luxury and replacing it by taking a meal from home. You could then put the cash you will save towards paying off an unexpected bill.

Depending on your circumstances, however, this could require a more creative approach. If you are already in a situation where your outgoings are extensive, but your income is tight, it may feel like there is no room to deal with an unexpected bill. If you can, it may be worth considering some frugality tips – such as batch cooking meals, splitting dishwasher tablets into two or three to make them last longer, or turning off the heating during colder spells and wearing more clothes instead. Measures like that can seem extreme at first, but often they are what is needed to help tide you over when an unexpected expense occurs.

More time on offer?

Depending on the nature of the bill, it may well be that you can get extra time to pay it off. It’s certainly worth calling up the institution in question if you can and asking them to consider giving you a payment holiday or at least developing a payment plan that can help both parties. After all: it’s in their interests to ensure that customers pay up eventually, and if they have room in their cash flow to allow for this, then they might well permit it. There are no guarantees, but it’s worth trying just in case.

Ask for a raise

In some cases, it makes more sense to look for the money you need to save by working with what you’ve got. And that’s especially true if you’re currently in work and have a paycheck landing in your bank account every week, fortnight or month. Depending on where you work, there might be no obligation for your employer to provide you with a pay rise. But there’s rarely anything to lose by occasionally and politely asking for a raise – and if they say yes, it could well solve your worries about the unexpected new outgoing.

Making money online

Some people also look into making money online, too. It can be a helpful way of raising income if your usual job does not offer much in the way of salary progression, and it can be done flexibly around childcare and other commitments. If you have skills in finance, say, you could look into online trading – although be sure to learn from experienced traders by taking some courses. Alternatively, those with marketing skills could look into flexible work like content creation or copywriting. Whatever you can do, there is likely to be some flexible work that suits you available online – and as a temporary stopgap to deal with that pesky new outgoing, it could make all the difference between financially surviving or going under.

Overall, there are many different options available for somebody who needs to contend with a bill they did not expect. As well as asking your creditor to extend your repayment terms, it’s also possible to focus either on cutting your current spending or increasing your current income. Not all methods work for all people, though – so it’s important to carefully assess your options and ensure that you choose a mode of money management that works for you and for the nature of the unexpected bill you have to pay.