Tuesday, February 02, 2010
The real deal on refund anticipation loans
The Iowa Attorney General's office is cautioning tax filers to think twice before saying yes to a Refund Anticipation Loan (RAL).
A RAL is a short term loan that is borrowed against the taxpayer's expected refund. These are very expensive loans, with very high APRs and a pile of fees. According to a 2009 report by the Consumer Federation of America and the National Consumer Law Center, the average loan costs include a $34 to $130 loan fee and administrative or application fees that can range from $25 to hundreds of dollars. With all costs and fees, the APR (annual percentage rate) for RALs varies from 50% to 1300%.
And what does opting for a RAL get you, the consumer? A RAL gets your refund to you only 3-6 days faster than an ordinary electronic refund deposit to your account.
More information is available by contacting the Attorney General's Consumer Protection Division at 888-777-4590.