Can I get a payday loan with my tax return?

Quick Answer No, a tax refund cannot be used as proof of income to obtain a payday loan. A tax refund is a one-time payment and not considered a recurring form of income. However, some lenders offer tax refund loans where they provide a loan based on the anticipated amount of your tax refund.

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Doreen Dumesle Answer updated on Jul 24, 2023

Fact checked by Steven Hill

No, you cannot get a payday loan using your tax return — but, you can use it to qualify for other similar loan options!

For a payday loan, lenders require verifiable steady income or employment. Your income can be from a typical job, government benefits, or regular bank deposits.

Learn: Can I get a payday loan without proof of income?

A tax refund does not qualify as "steady income" because it is a one-time payment that will likely vary from year to year. A tax refund is more like a surprise gift from Uncle Sam, and it’s not equivalent to a steady paycheck proving you can pay back the money you borrow.

💡 However, you could leverage your tax return with a tax refund loan. Say what!? Yes, certain lenders will give you a loan on the anticipated amount of your tax refund minus fees and interest (more on those below).

Here is a primer on how this all works:

  • The main way to get a tax refund loan is to use a legitimate tax preparation site. This ensures that you are getting the most accurate refund.
  • Some lenders may look into your tax history or even do a credit check.
  • After you have a refund amount from the preparation site, the lender will send you the loan amount usually by direct deposit.
  • When your actual refund is processed by the IRS, it will go to the lender.

Be aware that tax refund advances are very similar to payday loans in terms of costs and short-term lending practices. APRs can range anywhere from 6%-36% in just the first few weeks.[1]

Learn: How much is a payday loan?

Also, if your refund amount is less than the estimated amount, you will be on the hook for the difference.

Many tax refund loans also come with application fees ranging from $30-$100. For you, a tax refund loan may not be worth all the nickel-and-diming. Its cost along with the requirement of providing additional documentation, and possibly having to open an account with a tax refund agency, you may just be better off waiting for that refund to hit the mailbox. 📫 But, you definitely have the option![2]

  1. Where Can I Get a Tax Refund Loan? ↩︎

  2. What are tax refund loans, and how do they work? ↩︎

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