Tax Refund Advances are back in 2016
Here’s some good news for buy-here, pay-here dealers going into Thanksgiving celebrations.
After four years on the shelf, the banking industry has revived the Tax Refund Advance for 2016. This development means that much needed funds are expected to be in the hands of consumers in mid-January. Many individuals can expect up to $750 in 24 hours or less.
Prior to 2012, customers became accustomed to 24 hour refund loans. The old RAL (Refund Anticipation Loan) was greatly frowned upon by the current administration in Washington. Consumer protection advocates argued that the fees were too high and the APR was unacceptable. The latest reincarnation has put all of these concerns to rest. This is a win-win for both the dealership and the customer.
Come January, many of the new Tax Refund Advance products that are being proposed will come with zero APR and zero application fees.
Recent history has brought about the new normal of a 5- to 21-day tax refund cycle. This will still exist in 2016. The difference that is generating additional excitement is the opportunity to obtain up to $750 within 24 hours, without a credit check.
The demand for the return of the Tax Refund Advance comes largely in response to the decline in traffic seen by the professional tax preparer. Self-preparation software such as TurboTax and TaxAct seized control of the market after the RAL disappeared.
Consumers seem to have become unconcerned with their own personal qualifications to file a tax return. The market is hoping to capitalize on the primary, pre-2012 draw to the local tax preparer: the enticement of fast money.
Banking institutions within the tax refund industry market have seen dramatic declines in revenues since 2012. Self-prepared tax returns bypass these companies, resulting in reduced customer counts. An old product in the form of a Tax Refund Advance is seen as the new hope to reverse these trends.
Such trends have been mirrored at car dealerships who have not focused on the tax refund customer. Many lament that tax season is not what it once was. This phenomenon is due to both the refund loan hiatus and more aggressive competition.
Dealerships on the sidelines have seen the competition on the field steal their market share while garnering higher down payments. Those with tax refund strategies have seen a steady rise in business, leading to a decline for the rest.
Tax refund marketing has evolved over the past five years to counteract the absence of the refund loan. Now that the Tax Refund Advance has re-emerged, customer traffic is expected to soon follow.
Chip Wiley is the corporate trainer and marketing specialist for Tax Refund Services and Tax Max. Wiley can be reached at (813) 987-2199 or firstname.lastname@example.org.