What is a Pay Stub Refund Anticipation Loan?
A pay stub refund anticipation loan (pay stub RAL) is an advance on an expected tax refund. It is secured by the expected refund which is used to repay the loan. Most pay stub loans carry usurious interest rates that can reach above 100% APR. What are the Costs? If you, someone you know or a client is considering a pay stub RAL, it is important to understand the cost of such a loan. You can pay a fee of up to $102 just for the right to access your money a month early. This translates to a very expensive fee that is added into your yearly budget. Nearly every taxpayer that uses a pay stub RAL also pays for preparation of their tax return. These fees also tend to be pricy, with an additional charge for each document handled. The total of all of these fees can easily exceed $300 to $400. A taxpayer that is receiving the earned income tax credit (EITC) is getting assistance from the government because of the lower wages earned in that household. These low wage earners cannot afford to thro
