Everything you should know about tax refund loans.

With tax season in full swing, it's time to stop "quick refunds," often in exchange for prepaid loans commonly known as RALs. Many taxpayers admit they are an expensive option without realizing how expensive they are — and possibly unnecessary.

Taxpayers who get installment loans often have no idea how expensive and unnecessary they are.

When considering RAL, consider including more affordable and lower risk options.

You pay interest on money you already own.

RALs or Return Anticipation Loans are short-term unsecured loans, usually provided by non-bank lenders, with terms as short as 7 to 14 days. When taxpayers apply for a RAL, they usually receive immediately cash equal to the expected refund, less any costs associated with the transaction. The customer agrees to pay the loan interest rate, which may be in the triple digits when expressed as an annual percentage rate (APR). In most cases, lenders will set up a separate account to receive taxpayers' tax returns from the IRS. Repayment can resolve the debt.

You are taking a risk.

Like other loans, RALs come with some risks, including a higher debt load if your returns are rejected, delayed or lower than planned returns. RALs are expensive in the short term, but if something goes wrong with your return, they are often very expensive. Debt can build up over time, which can hurt your credit score.

RAL is expensive.

RALs have various fees, including a loan application fee of about $100; a tax filing fee of about $40; a check processing fee of about $20; a "quiet" assurance from your accountant that you will receive on your tax form and reimbursement of account fees for services required to set up a temporary account, with a minimum fee of $30 and interest rates typically starting at 36% and rising to 68%. Expect to spend at least $200 to get a "fast" tax refund of $2,000 or more.

RAL can appear in surprising places.

Consumers are most likely to encounter these "instant tax refunds" at tax filing and tax filing companies. However, these are not the only areas you can address with RAL advocacy. Many businesses offer these loans, including auto dealers, electronics and furniture stores, boat showrooms, and more.

There are better options.

There are better and cheaper options. RAL is not the only option. If you can wait, the IRS will refund you for free. If you filed your tax return electronically and requested direct deposit, the IRS refund cycle can take up to eight days. In most cases you can save a lot if you wait a few days. Make sure you have a bank or savings account where you can put your returns directly into it. Most credit unions and banks offer this service for free. Tax preparation services without the IRS can also help you file your taxes.

Be a savvy consumer. Taking out RAL may affect your tax refund.