LOS ANGELES, Feb. 27, 2012 As tax season fast approaches, Loans.org is issuing a warning to borrowers across the nation to avoid tax refund loans . To educate consumers on the topic, the site has published a new article detailing the harmful effects this type of borrowing instrument?more commonly referred to as a refund anticipation loan ( RAL )?has on consumers and society as a whole.
These quick, short-term personal loans use a borrower?s IRS tax refund as collateral and grant borrowers with high-interest financing funds that are meant to be paid off when the borrower?s tax refund check is delivered.
Unlike payday loans and other forms of quick-cash, RALs have no principal caps, so borrowers can wind up with thousands of dollars of debt at triple-digit interest rates.
Borrowers are sometimes tricked into believing this is a service offered by the government that advances their tax refund, but that?s not true. Rather, certain lenders have used clever wording to trick taxpaying citizens into taking RALs out.
As a result, the IRS is trying to put an end to this practice. The government?s tax agency has decided to remove their debt indicator records from public viewing, so RAL lenders will be unable to accurately predict how much of a RAL they should loan to an individual.
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Despite the fact that RAL lenders must put themselves in a risky position without the IRS?s debt indicator records to rely on, there are still sources providing these volatile personal loans. Instead of succumbing to the temptation of taking out a RAL, borrowers would be better off participating in the IRS?s new e-file and direct deposit methods of receiving refund checks?which take just a few days to receive refund money after an individual?s taxes are filed.
For further analysis on RALs and other personal financing issues, you can go to to find informative articles, breaking news and answers to the most important financing questions.
To access the article on RALs, readers can follow the ?Articles? link at the top of any page on the site.
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