2007-12-01 03:20:16 · 4 answers · asked by maddvic 1 in Business & Finance ➔ Taxes ➔ United States
The tax preparation firms are doing loans this year. When you get your taxes done, you may apply for a short-term loan based on and secured by your refund.
What was discontinued were pre-season loans backed by third party banks which were unsecured by the refund.
The banks announced in March 2007 that they would not continue to offer these loans. There were no laws violated, in fact the interest rates were unreasonably low. The loans were bad for business for a lot of reasons.
H&R Block does have a preseason line of credit which is issued by its own bank, H&R Block Bank. Details are on the H&R Block website.
2007-12-01 04:09:22 · answer #1 · answered by ninasgramma 7 · 1⤊ 0⤋
Bad publicity over high interest rates.
Failure of clients to return to have their taxes done (and subsequently not paying the loans off with their refunds).
Here's a typical scenario. Individual goes to JH in 2006 to get a holiday loan. They agree to receive $500 and promise to come back and have their taxes done. Instead they go to HRB and get a refund anticipation loan through them. The fees for preparing the taxes and costs of doing the 2nd loan are pulled from the refund, but since HRB uses a different bank system than JH, the original $500 isn't repaid.
The individual ignores all mail from the first bank because they've already got their money and they ASSUME the first bank got paid. Since the individual doesn't actually know the terms of the loans (they didn't read them) and doesn't know exactly what they paid for what (if they did, they wouldn't pay so much), they can't tell the difference.
2007-12-01 03:29:58 · answer #2 · answered by Anonymous · 2⤊ 1⤋
Because, they are probably in violation of lending laws.
The interest charged on those holiday loans are sometimes
300%.
Although there is a huge demand, it is robbery...I worked for one of those chains for many years, and always attempted to get folks to wait and file and then wait for the 10 - 13 day return...When I would point out what the interest was, they didn't really care....
2007-12-01 03:27:27 · answer #3 · answered by Wood Smoke ~ Free2Bme! 6 · 1⤊ 1⤋
Enough people just took the money and ran to make it unprofitable for HSBC to continue the product. Simple as that.
2007-12-01 04:10:05 · answer #4 · answered by Wayne Z 7 · 3⤊ 0⤋