Instant refund tax loans are just that, loans. But not everyone realizes what they are, and the cost for the service may be significant.

“I don’t think people understand that in the front end, but my people know this,” said John Saponari, vice president of DeKalb’s Jackson Hewitt franchise, 2022 Sycamore Road. “We have a form taped to the desks that state it is a loan, and there is a truth in lending law so people understand the rate.”

About 75 percent of Saponari’s customers took one of the loans during the first 60 days of the tax season, he said, including college students who were eager to take advantage of the loans.

“There’s no out-of-pocket expenses this way; [college students] jump at that opportunity,” Saponari said. “It’s a big chunk of interest, but the service you get, instant money, you pay for the service. It is much more expensive.”

The application filing fee to take out the loan costs a base, non-refundable $75 at Jackson Hewitt. This does not include the cost of tax preparations, which varies based on how complex the filing is.

Saponari gave an example of a $1,000 refund, which would require the application fee and anywhere from $11 to more than $30 in interest and other fees. The total would be between $86 and $110 to get the refund next day.

“We make sure we do a tax payer information form, and if it says $5,000 back, about $250 is going to fees,” Saponari said.

Sometimes people do not get their refund loans, even after paying the required fees, because they lie on their tax return.

“It’s crazy sometimes, but we rely on the honesty of the taxpayer,” Saponari said.

Paul Freidel, coordinator of NIU’s Volunteer Income Tax Assistance program and a masters of accounting science and taxation graduate student, said tax loans take advantage of people with low incomes.

“They don’t realize the fees and effective interest rates are ridiculous,” Freidel said. “I don’t like it. You get your money two weeks ahead of time, you pay them a hundred bucks for two weeks use of the money, that’s ridiculous. People don’t calculate interest rates.”

VITA, which prepares taxes for free, will be available from 11 a.m. to 3 p.m. Monday and Wednesday in the student lounge of the Founders Memorial Library.

About 30 accounting students, who have completed a tax preparation course and exam, have assisted with the VITA program this year.

Filing is available on paper only this year, but next year electronic filing should be available, Freidel said.

“If you e-file your tax return, and you have it direct deposited, you get it in 10 to 14 days,” said Sue Hales, Internal Revenue Service spokesperson.

“If you file a paper return this late in the filing season, it could take six to eight weeks to get your refund. We were still looking for 51- million tax returns as of April 1. That’s a lot in a short period of time, and that’s why [there’s a] six to eight week [wait],” he said.