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people climbing wall
people climbing wall

The Hazards of PayDay Loans for Tax Refunds

Tax time is approaching and many people will choose to receive Refund Anticipation Loans (RAL) better known as PayDay Loans from private tax preparers; so, they can leave the tax office with a check for their anticipated refund amount.


Before agreeing to an RAL the taxpayer should be aware of the following:


  • By agreeing to a refund-related financial product they will not receive their refund from the IRS as the IRS will send their refund to the financial institution.
  • RALs are interest bearing loans and not a quicker way of receiving their refunds from the IRS. No matter who files the return, the refund takes the same amount of time to be processed.
  • If the financial institution does not receive a Direct Deposit within the expected time frame for whatever reason, the taxpayer may be liable to the lender for additional interest and other fees. These loans could end up costing even more money; thereby, reducing the amount of the refund.
  • The taxpayer will be paying the loan fee, interest and the preparer fee. All of these fees can be eliminated if the taxpayer is able to wait 1-2 weeks for their refund and goes to a FREE VITA site (Volunteer Income Tax Assistance). They will then save all of these fees and be able to have the refund directly deposited to their own bank account.


FREE VITA Site at Community Teamwork!

Community Teamwork works with the Internal Revenue Service to recruit and certify volunteer tax preparers. These are people from our own community who donate their time to study and pass tax tests in order to save others the cost of private tax preparer fees and loan fee and interest. There are never any fees with VITA!

The normal direct deposit time is only 1-to-2-1/2 weeks.

What is CTI’s VITA site doing to help?


  1. The program is adding additional tax appointment sessions throughout the month of February in order to help more people file and receive their refunds earlier.
  2. The MyFreeTaxes IRS-approved, self-preparation, tax program will be accessible during scheduled times on several of CTI’s community computers at 17 Kirk Street starting Wednesday, Feb. 4th. Taxpayers will be able to prepare, print and efile their own returns. VITA personnel will be available during those times to assist anyone with questions.

VITA will begin accepting calls for appointments starting on January 15th. If taxpayers have any questions before that they can contact Gail at 978-654-5676.