What’s the problem with Refund Anticipation Loans?
Actually there are several problems according to studies from a variety of consumer groups such as Consumer Union, CFA and NCLC as well as research groups such as the Brookings Institution. Here are several major points. • Promotion and presentation of quick tax refund loans are often misleading. Most promotions emphasize the speed with which you’ll get your money not the fact that what you’re getting is a loan. Studies show that many consumers never realize the check or cash they’ve gotten is a loan not their refund. Even where companies state clearly that their product is a loan, they may not mention that fact until after a consumer has signed the RAL application. In other cases, paperwork may bury the loan information in fine print, or a customer may be given a stack of papers and directed to sign various lines (including the loan agreement) without looking fully at the papers. • High costs characterize RALs. An exorbitant interest rate is the first high cost. Loan fees that typical
