In recent years, tax refund anticipation loans have become common place.
Borrowers are essentially able to have a tax professional calculate their anticipated refund amount, if any, and for a fee, can issue a cash advance to the borrower. This can allow a person or family to receive their refund earlier than anyone else, and also ensures that their taxes for the coming season are completed, more or less, on time.
This usually works out well for everyone involved. The tax professional or company can get a jump on tax-season business, and earn a loyal customer base at the same time.
But for one New Mexico family, their plans for enjoying the holiday season of 2016 with a refund-anticipation loan ended up causing headache, heartache, and a pain in the wallet.
The DeJolie family received a tax refund anticipation loan in November of 2017, which enabled them to travel and have food for the holidays. They are now suing the tax service company, who issued their loan, for not listing an accurate annual percentage rate and additional charges for the tax preparation services in the paperwork for the loan. The DeJolie family say that the APR listed in their loan paperwork was supposed to be 264%, which is not uncommon in these types of loans. The problem is that hidden charges and other fees buried in the fine print brought the “true” APR up to a whopping 385%, which is, to be blunt, insane.
To pour salt in the wound, the DeJolie family also states in their claim that they were charged $157.05 for the tax preparation portion of the loan, but the invoice they received at the signing was only for $145 even. They state that they also received a charge for $9.75, for a credit check.
This lawsuit is still pending, but it does bring to light a situation that many people may encounter, as these types of loans become more popular.
How can a normal person protect himself from hidden fees and charges they did not agree to in a loan contract?
This problem can be avoided by one simple task. Read the loan paperwork thoroughly and understand it thoroughly before signing on the dotted line.
May I repeat?
Read the loan paperwork thoroughly and understand it thoroughly before putting pen to paper and signing the thing!
If that means taking the paperwork home with you, and reading it over multiple times, then do so. Get the lender to promise the loan will still be waiting for you within a certain time frame, and then do your due diligence to make sure you are entirely informed before you sign. By so doing, you ensure you are protecting your rights, and knowing in detail what you are getting yourself into.
There is no excuse for not reading the fine print.
A lender legally cannot force you to sign a contract for a loan, and you need to know your rights before you get pressured into a loan you can’t afford. If the lender will not allow you to take the paperwork home to thoroughly peruse on your own time, or tells you the loan is only valid if you sign before you leave, then take your business elsewhere. If they were being honest in the paperwork, what would they have to rush you for?
That’s right. There is no reason for them to rush you.
Don’t let them convince you your rights don’t matter. Take your time, or pay the fine. It’s your money and peace of mind; protect them both.