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While a tax refund might put a substantial amount of money back in your pocket — the average refund for the 2020 filing season was $2,535, according to the IRS. However, it typically takes six to eight weeks to receive your refund.
If you need your tax refund more quickly, a tax refund advance loan could get you early access to some of your refund. But there are some downsides to keep in mind.
Here’s what to know if you’re considering a tax refund advance:
- How a tax refund advance works
- Where to get a tax refund advance
- Personal loan vs. tax refund advance
- Other tax refund advance alternatives
- Compare offers to get the best deal
How a tax refund advance works
A tax refund advance loan lets you access some of your expected tax refund early — often within 24 hours, depending on the tax preparation company you choose. Many tax refund advance services also come with no interest or fees.
After your refund is processed by the IRS, you’ll repay the tax company the amount you borrowed in advance while keeping the remainder of your refund.
And unlike other types of credit (like credit cards or personal loans), you won’t have to worry about paying higher interest charges if you have less-than-perfect credit.
However, there are some drawbacks to consider:
- Your tax refund could be less than you expect. Your tax refund advance is based on your expected refund. However, keep in mind that the IRS could deny certain deductions that you claimed or find errors that reduce the amount of your refund. If your refund turns out to be less than you expected, you’ll have to repay the difference to the lender.
- You typically can’t access your full refund. Most tax preparation companies only let you borrow a portion of your expected refund. For example, if your expected refund is $3,000, you might only be eligible for a $1,500 loan.
- There’s usually a cost to file your tax return. While tax refund advances are often advertised as having 0% interest and no fees, that doesn’t mean the loan is free. Tax preparation companies typically charge you a fee to file your returns, which you’ll have to pay to qualify for a tax refund advance. Prices often start at $30 to $40 for a federal tax return (depending on the company), with additional fees if you need to file a state return or have a complex return. If you don’t pay these fees upfront and choose to have them deducted from your refund later, you might have to pay another fee to get a tax refund advance loan.
- There might be fees to load your refund onto a debit card. Many companies will load your refund advance onto a debit card. However, these cards might come with additional fees, such as for ATM or over-the-counter withdrawals or account inactivity.
Learn More: How to Get a $5,000 Loan
Where to get a tax refund advance
Many tax preparation companies offer tax refund advance loans, including the following major businesses. Note that none of these are Credible partners.
|H&R Block||Jackson Hewitt||TurboTax|
|Loan amounts||Up to $3,500||$500 to $6,000|
(depending on loan type and customer relationship)
|$250 to $3,000|
|Time to fund||Same day as filing, if approved||Typically within 3 hours of approval|
|Fees||None||$0 to 2.5% of loan amount|
(depending on loan type)
|Applications open||Jan. 4, 2021 to Feb. 28. 2021||Beginning late Jan. 2021|
Check Out: Where to Get a Personal Loan
Personal loan vs. tax refund advance
If you need to borrow money, a personal loan could be another option. Personal loans typically offer higher loan amounts than tax refund advances — for example, you might be able to borrow as much as $100,000 or more, depending on the lender.
And unlike tax refund advance loans, personal loans are available at any time of the year.
If you’re considering a personal loan vs. a tax refund advance, here are several points to keep in mind:
|Personal loans||Tax refund advances|
|Loan amounts||$600 to $100,000|
(with Credible partner lenders)
|Typically $200 to $4,000
(Possibly higher, depending on the company)
|Fees||Might come with origination fees||Generally no origination fee or APR
(Though there might be a fee if you don’t pay your filing charge upfront)
|Credit score requirements||Typically need good to excellent credit (670 and higher)|
(Though some lenders provide options for poor and fair credit)
|All credit scores accepted
(Including no credit history)
|Loan disbursement||Typically within 7 business days|
(Depending on the lender)
|A few hours up to five business days
(Depending on the company)
Keep in mind that most personal loan lenders don’t charge prepayment penalties. This means you likely won’t have to worry about paying extra fees if you pay your loan off early.If you take out a personal loan instead of a tax refund advance, you could use your tax refund to pay off your loan later on, too.
If you decide to get a personal loan, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our partner lenders in the table below in two minutes.
|Lender||Fixed rates||Loan amounts||Min. credit score||Fees|
|7.99% - 35.99% APR||$10,000 to $35,000||Not disclosed by lender||Yes, origination fee|
|9.95% - 35.99% APR||$2,000 to $35,000**||550||Yes, origination fee|
|7.99% - 15.19% APR||$10,000 to $50,000||740||No prepayment penalty|
|8.99% - 35.99% APR||$2,000 to $50,000||600||Yes, origination fee|
|6.99% - 24.99% APR||$2,500 to $35,000||660||None, as long as you pay on time|
|8.3% - 35.89% APR||$1,000 to $40,000||600||Yes, origination fee|
|7.99% - 35.99% APR||$2,000 to $36,500||600||Yes, origination fee|
|5.99% - 23.99% APR||$5,000 to $100,000||700||None|
|18.0% - 35.99% APR||$1,500 to $20,000||None||Yes, origination fee|
|10.5% - 29.99% APR||$5,000 to $40,000||640||Yes, origination fee|
|7.74% - 17.99% APR||$600 to $50,000 |
(depending on loan term)
|6.99% - 35.99% APR||$2,000 to $50,000||640||Yes, origination fee|
|8.99% - 23.43% APR10||$5,000 to $100,000||Does not disclose||None|
|11.69% - 35.93% APR7||$1,000 to $20,000||560||Yes, origination fee|
|8.49% - 35.97% APR||$1,000 to $50,000||600||Yes, origination fee|
|5.4% - 35.99% APR4||$1,000 to $50,0005||580||Yes, origination fee|
Keep Reading: Is Using a Personal Loan for Taxes a Good Idea?
Other tax refund advance alternatives
If a personal loan or tax refund advance doesn’t seem right for your needs, you might be considering other fast loan options, such as payday loans, pawn shop loans, or car title loans.
However, while these same-day loans might get you quick cash, they should only be used as a last resort. These types of loans typically come with sky-high fees and interest rates — often in the triple digits.
Plus, you’ll generally have to repay the loan in a matter of weeks, which might not give you enough time to pay it off without getting further into debt.
Another option is applying with a cosigner. Not all lenders allow cosigners on personal loans, but some do. Having a creditworthy cosigner could help improve your chances of getting approved for a loan.
Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
No matter which loan option you choose, it’s a good idea to consider how much the loan will cost you over time. You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
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Compare offers to get the best deal
In general, it’s a good idea to consider as many loan options — such as tax refund advances and personal loan offers — as you can. This way, you can find a loan that best suits your needs.
If you decide to take out a personal loan, remember to compare as many lenders as possible. Consider not only rates but also repayment terms and any fees charged by the lender.
Credible makes comparing lenders easy — you can see your prequalified rates from multiple lenders in two minutes without affecting your credit score.
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