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tran68
01-27-2005, 03:52 PM
If someone owed you $1,200, would you pay someone else $100 or more to get your hands on that money if all that stood in the way was a two-week wait?

If you're smart, you probably said: "No way."

But the fact is, thousands of taxpayers every year eagerly go into a tax preparer's office and give good money away for the opportunity to get their tax refund in a few days instead of a few weeks.

What these people are doing is getting a "refund anticipation loan," or RAL, which is a short-term loan backed by a tax refund. Typically several fees are involved, including a loan application and a loan preparation fee charged by the tax preparer. Those fees are on top of the fee charged to prepare your tax return and possibly a fee to file electronically. The unfortunate thing is that many of the people getting these loans would qualify for free online tax preparation and free electronic filing, and if they have a bank account they could get their refund in less than two weeks.

Every year about this time, consumer advocates try to warn people about the high cost of tax-refund loans.

In fact, two consumer groups recently issued a report documenting how tax-refund loans cost workers $1.14 billion in loan fees in 2002, plus an additional $406 million in other fees.

The report, "All Drain, No Gain: Refund Anticipation Loans Continue to Sap the Hard-Earned Tax Dollars of Low-Income Americans," provides an annual update from the National Consumer Law Center and the Consumer Federation of America.

According to the report, this tax year a RAL for an average refund of around $2,100 will cost $132 (on top of tax preparation fees averaging $120) and bears an effective annual interest rate (APR) of about 180 percent (240 percent if administrative fees are included).

In a report last October by the General Accounting Office, investigators found what I consider some outrageous fees. The GAO said that one tax preparer interviewed indicated he would charge $174 for a RAL on a $700 refund, which equates, assuming a loan period of 10 days, to an annual interest rate of more than 900 percent. Another preparer quoted a RAL fee of $130 on a $1,200 refund, which equates to an APR of about 400 percent, assuming the same loan period.

About 1 in 10 American taxpayers took out RALs in 2002, over half of them low-wage workers, the report pointed out. That came to 12.7 million refund loans in 2002.

Several states and cities have taken action over the past few years to inform consumers about RALs. For example, Illinois, Minnesota, North Carolina and New York City have passed regulations specific to RALs requiring mandatory disclosures, including the annual percentage rate for the RAL and the estimated time for receiving a refund if a taxpayer filing electronically elects to have the refund direct-deposited into his or her bank account. Consumers in these jurisdictions also are warned that they have to repay the loan if the Internal Revenue Service does not issue the expected tax refund.

I applaud efforts to make providers improve disclosures about these loans. But better disclosure still won't stop the growth of refund anticipation loans because lenders and tax preparers are earning easy money on a product with little risk. They know that people in need are often easily influenced.

So, the task continues to be up to consumer advocates, and perhaps you, to get the word out.

Tell any family member, friend, neighbor or co-worker who might ask that a fast refund loan is no bargain. Tell them not everything being offered as a convenience is good for them.

And just so you know, here's how soon you can expect your return:

• If you file your tax return electronically and request a direct deposit to your personal checking or savings account, you can receive your refund in less than two weeks.

• If you file electronically and request that your refund be mailed, it could take two to three weeks.

• If you mail your return with a request to direct-deposit your refund to your bank account, your refund takes approximately four to six weeks.

• If you mail your return with a request for your check to be mailed, it could take approximately six to eight weeks, depending on how soon you file.

I have no doubt that many people getting refund loans can tell the saddest stories about why they need the money in a hurry. But if you're broke, the last thing you should do is pay money for something you would get anyway. William Shakespeare was right when he wrote: "How poor are they that have not patience!"

naturalluv
01-27-2005, 04:47 PM
Great post tran68!! I was one of those who always had to have my money right away, because a sista be broke. But now after 9 yrs of paying outrageous fees to H&R Block along with the fee for the RAL, I have finally gotten smart. I will be doing my own taxes this year online, Ten days is not a long wait. We need to be smarter about our finances. Thanks for putting this out there in detail tran68.

tran68
01-27-2005, 05:18 PM
I am soooo HAPPY for u!!! :)

As a single parent I never took out a RAL but several years ago I did do the payday loan thang a few times and it was a nightmare tryna get out of that hole. :icon_headshake: ..the money them folks got from me makes me ILL!! :angry: But NOW I'm doing better, stopped living paycheck to paycheck and that's what it's all about....work your way UP and OUT so you don't have to rely on these loansharks!! :(

ooooo
01-27-2005, 06:34 PM
Living within and even way BELOW your means is closer to the heart of the issue. The reality of this is that most folks that take these loans probably have no other choice as their bills and debts are piling up sky high. They are in a financial rock and hard place with almost no choice. In other words they are DESPERATE.

I have always done my own taxes and i don't believe I have ever taken a tax refund loan because I knew it was too expensive especially CONSIDERING how broke I was.

I am not so broke today but I could do betta...

I need to focus on living way below my means. Moving to charlotte, NC is part of that because the cost of living there is way way lower than in seattle and the economy there is sky-high.

shay
01-28-2005, 04:55 PM
Originally posted by afronappy@Jan 27 2005, 07:34 PM
Living within and even way BELOW your means is closer to the heart of the issue. The reality of this is that most folks that take these loans probably have no other choice as their bills and debts are piling up sky high. They are in a financial rock and hard place with almost no choice. In other words they are DESPERATE.


692002



ITA.

jorjeni
01-28-2005, 05:14 PM
I will be getting a RAL this year again but this will be my last year. I got sick a few weeks ago and got behind again cause I am living paycheck to paycheck. Anyway I need my car payment by next week or they will garnish my wages so I am getting a RAL so I will have my car payment. I don't have anyfamily I can borrow from and I refuse to take out a payday loan to make the payment. I plan to pay the car off with my money and all my other bills so that I no longer have to live paycheck to paycheck. I am thisclose to getting my act together this year will be it for me by June I will be on the track to saving more not paying more or spending more.

I have a buget I can live with and a savings plan. I am really happy with my plan but it depends on this check. I wish I didn't have to get a RAL I wish I could wait the 2 weeks but I just can't. Oh I have called my loan and asked for a hardship extention they don't have any. No skip a payment plan or anything If you are more than 30 days late they can start garnishing your wages. Live and learn

naturalmama
01-28-2005, 05:18 PM
I am not sure about your situation but are you in bankruptcy because from my understanding the only people who can garnish your wages is the government. Are you sure these bill collectors are not just trying to scare you. I guess they could repo your car and you dont want that.

Anyway, I pray that the situation is resolved and if you have to do the payday loan it will the last time for you. Its terrible how these people take advantage of folks having a tough time.

tran68
01-28-2005, 06:07 PM
I'm with naturalmama...are you behind on your car note or is it just DUE? Most major financing outfits don't threaten to garnish in that 30 day grace period, could be a scare tactic. Only the IRS/state can garnish w/o a judgment...or so I thought.....But nonetheless if you have to, you have to and it sounds like you have a good plan going forward so this doesn't happen again.

dayna806
02-05-2005, 03:59 PM
I've tried to advise my friend and others against the rapid refund loans. The $200-$300 they charge is ridiculous.

mrandmrsmer
02-05-2005, 07:22 PM
I won't be getting a refund, but even when I did receive one, I never went for the "refund anticipation loan". I just waited the 2-3 weeks it would take for my money to be deposited into my account. I'm pretty patient for the most part. :)

moonchild
02-05-2005, 08:45 PM
I was THIS close to walking in to HR Block for a RAL (would have been the first). Instead, I was gonna call my friends tax preparer and give her a chance (she'd want 60 -100 bucks).

Then, on a whim, I went to turbo tax.com (as per the ladies on this thread) and blew through my return and watched my REFUND grow through my own work (the hard labor of point and clicking...lol).

After I found out that I could file my turbotax federal return for FREE via irs.com, I sent off my fed and tax for a grand total of 20 bucks. All from the comfort of my home.

Paying someone else to get MY money

vs.

getting my money myself in my undies from the home computer?

No brainer for me.

I think a lot of folks just get very, very afraid that they're incompetent. These companies BANK on that.

~mc~

siriuswizdom
02-06-2005, 01:34 AM
*Tax time horror story*

A few years ago a coworker recommended a young lady to me who did her taxes. I went to see this young lady on the strength of my coworker. I asked before we even got started what her price would be to do my taxes. She said "I don't have any set fees...whatever you pay me I'll be happy with". We started the process. During the course of a few days she emailed me and called me with a few questions. Again, I asked her what would she charge me and, again, I received the same response. She called me one day for some more information and complained about a client only paying her $50. That let me know that $50 wouldn't suffice. When she told me how much I would be getting back, once again, I asked her how much she was going to charge me and, again, I received the same answer. She told me the appx. date the funds would be in my account and I agreed to transfer whatever funds I felt she deserved into her account. The day comes and I transfer $200 to her account. She calls asking if I transferred the money. I told her yes $200. She gets silent. I asked her what was wrong. I felt $200 was more than she deserved because I'm single with no dependants and at that point in time I didn't own my house. She really had no work to do! I asked her what was wrong and if that wasn't enough. She responds with "I just thought it was going to be more. I really wanted to get my kids a swing set". I reminded her that I asked her several times how much she would charge me and she said whatever I gave her she would be happy with. I told her that I'd call her back because I was at work and I didn't want to get upset in there. I then went to the coworker and asked her if she could possibly tell me how much she paid the girl to do her taxes. She told me she paid the girl $900 :shocker: but that wasn't expected of me. I asked her why she paid that much and she said because the girl was her niece and that she has several properties that she owns including her primary residence. She also owns a home based business. I'm left wondering why $200 isn't enough when I don't have anything close to what her aunt has. About 30 minutes later the girl who did my taxes husband calls and demands the money. He's yelling saying his wife told me her fee was $500 :shocker: and he heard her tell me that. I argued with him for a minute and he cut me off by asking me if I was going to pay her or not. I said hell no and hung up on him. Now he's mad, his wife is mad, and aunt is mad. :dunno: I've done my taxes myself ever since.


*Sirius

Khardelya
02-06-2005, 03:28 AM
OMG! i still can't believe someone would pay $900. every year i see many advertisments for next day refunds and these places are always full. i guess when folxs need money, they need it.

mrandmrsmer
02-06-2005, 04:03 AM
:shocker: Either $500 or $900 is serious gouging. Doing taxes on your own is the only way. I went to TaxAct and paid $9.95 for myself and my husband last year to do our federal and state taxes online. Had to pay the $9.95 for the state taxes, and I will be doing the same thing again this year. I'm glad you got away from her and quick!!

Nappalonia
02-07-2005, 04:02 PM
I normally stay clear of that, I can wait 4-6 weeks, I want all mine :P .

But I did go rapid this year because I have some out of town business too take care of and I wanted to do it as soon as possible, the fee actually wasn't bad for what I got back, but I won't be it doing again, unless it is a die hard situation!

What I hate is the Instant Tax commercial they play on the radio, it starts off with a deep mans voice "telling" you, "you know you want it baby" , it's like :huh: , want what, sounds like your talking about sex :rolleyes: , I can't stand that commercial, I bet they only play that on black radio stations :doh

bluvember
02-08-2005, 12:17 AM
You know it! Cause WF would be calling the station complaining and calling the local news crying obscenities where their children can hear it.

Dolliesdaughter
02-09-2005, 04:25 PM
If that tax refund once a year is what makes or breaks you then you have some serious issues going on.

I wait for my refund sent out via snail mail because the tax refund is not what makes my year. I have friends who swear every year they are going to take care of this or that when they get their refund. It NEVER happens and they are in the same boat next year.

josie29
02-15-2005, 02:47 AM
Originally posted by siriuswizdom@Feb 5 2005, 09:34 PM
*Tax time horror story*

A few years ago a coworker recommended a young lady to me who did her taxes. I went to see this young lady on the strength of my coworker. I asked before we even got started what her price would be to do my taxes. She said "I don't have any set fees...whatever you pay me I'll be happy with". We started the process. During the course of a few days she emailed me and called me with a few questions. Again, I asked her what would she charge me and, again, I received the same response. She called me one day for some more information and complained about a client only paying her $50. That let me know that $50 wouldn't suffice. When she told me how much I would be getting back, once again, I asked her how much she was going to charge me and, again, I received the same answer. She told me the appx. date the funds would be in my account and I agreed to transfer whatever funds I felt she deserved into her account. The day comes and I transfer $200 to her account. She calls asking if I transferred the money. I told her yes $200. She gets silent. I asked her what was wrong. I felt $200 was more than she deserved because I'm single with no dependants and at that point in time I didn't own my house. She really had no work to do! I asked her what was wrong and if that wasn't enough. She responds with "I just thought it was going to be more. I really wanted to get my kids a swing set". I reminded her that I asked her several times how much she would charge me and she said whatever I gave her she would be happy with. I told her that I'd call her back because I was at work and I didn't want to get upset in there. I then went to the coworker and asked her if she could possibly tell me how much she paid the girl to do her taxes. She told me she paid the girl $900 :shocker: but that wasn't expected of me. I asked her why she paid that much and she said because the girl was her niece and that she has several properties that she owns including her primary residence. She also owns a home based business. I'm left wondering why $200 isn't enough when I don't have anything close to what her aunt has. About 30 minutes later the girl who did my taxes husband calls and demands the money. He's yelling saying his wife told me her fee was $500 :shocker: and he heard her tell me that. I argued with him for a minute and he cut me off by asking me if I was going to pay her or not. I said hell no and hung up on him. Now he's mad, his wife is mad, and aunt is mad. :dunno: I've done my taxes myself ever since.
*Sirius

705242


I know that this is an old post, but I just cannot believe what I read. You tranferred too much. I would actually demand money back. She filled out a 1040EZ, I bet, which takes about 5mins and she wants $500. She is a thief, plain and simple.

elleebeme5
02-15-2005, 12:04 PM
Originally posted by jorjeni@Jan 28 2005, 01:14 PM
I will be getting a RAL this year again but this will be my last year. I got sick a few weeks ago and got behind again cause I am living paycheck to paycheck. Anyway I need my car payment by next week or they will garnish my wages so I am getting a RAL so I will have my car payment. I don't have anyfamily I can borrow from and I refuse to take out a payday loan to make the payment. I plan to pay the car off with my money and all my other bills so that I no longer have to live paycheck to paycheck. I am thisclose to getting my act together this year will be it for me by June I will be on the track to saving more not paying more or spending more.

693409


Another thing you can do is adjust your withholding. If you are getting a refund large enough to pay off your car, then you are probably having too much taken out each week. Making that adjustment will give you more money each week and you won't be struggling so much with a paycheck to paycheck lifestyle. I've posted it several times but huge refunds are a bad idea. Using the example here, you can let the government keep $1200 interest free or you can put $1200 in the bank and draw a little interest.

tran68
02-15-2005, 03:03 PM
Elle has it RIGHT!!

I got $40 back this year from the feds when I usually get a few thousand....well I adjusted my witholding this time last year and the money I would have "loaned" to the govt earned 9% interest in 2004 in my 401K!! This year since I paid off my car I'm putting that payment into a ROTH IRA. I also raised my 401 contributions....I can't wait to see how much I have saved up at the end of 2005, I get giddy just thinking about it.... :P

afrochick
02-15-2005, 03:15 PM
Exactly tran68!! :)

The whole point of the matter is to not overpay your taxes in the first place. If anyone is getting a large refund this year, you should adjust your witholding in order to pay the the amount of taxes you owe. Any refund should not be over $100!! It's almost as if people use the IRS as some sort of forced savings account. :doh If you can't use that extra money every payday for bills and living expenses, at least you can sock it away in an interest-bearing account.

China
02-18-2005, 05:14 PM
Originally posted by siriuswizdom@Feb 6 2005, 02:34 AM
*Tax time horror story*

She called me one day for some more information and complained about a client only paying her $50. That let me know that $50 wouldn't suffice. When she told me how much I would be getting back, once again, I asked her how much she was going to charge me and, again, I received the same answer. She told me the appx. date the funds would be in my account and I agreed to transfer whatever funds I felt she deserved into her account. The day comes and I transfer $200 to her account. She calls asking if I transferred the money. I told her yes $200. She gets silent. I asked her what was wrong. I felt $200 was more than she deserved because I'm single with no dependants and at that point in time I didn't own my house. She really had no work to do! I asked her what was wrong and if that wasn't enough. She responds with "I just thought it was going to be more. I really wanted to get my kids a swing set".
705242


This chica and her husband woulda got cussed out calling me for more money. She's trying to hustle you. She probably thought you were a sucka like your coworker.

scrappy
02-25-2005, 02:42 PM
:) I always file my own taxes using the 1040EZ form. I have a friend who used to work at H&R Block, and she checks it for accuracy. The only out-of-pocket expense is a stamp to mail it off.

:angry: We have to learn to be patient because it is ridiculous how much $ these companies make off of Blacks and Hispanics.

mjac202093
02-25-2005, 03:30 PM
I was able to do all my taxes absolutely free. No fees whatsoever. I went onto H&Rblocks wesite and the had a section for free tax preparation. Got my refund in 8 days.

Since I live in CT, can e-file or tele- file my taxes at no charge as well. Got my refund in 3 days.

It really is a scam that these companies run to get into the pockets of the less fortunate who may not know the opportunities that are out there. Most cities have free tax preparation at the town hall so if you feel you'll miss something they can do the preparation for you.

Neosoul
02-27-2005, 03:06 PM
My co-worker is broke, having a baby and paid $400.00 to get her refund back now. She thought I was dumb to wait.... :dunno: go figure.

-n_

Jams
02-27-2005, 03:31 PM
When I lived in Cleveland, I always had the Federal Goubment ( :P )
do my taxes. My thought is if they screw up it's on them. It was free and I always got my $$ back within 2 weeks. Kinda like getting pad, gotta wait 2 weeks.
Now that I've moved and here the gubment facilities aren't near me, I've used H& R block free service. Now you have to be like friggin poor to get it done for free,but mind you that 1) I'm poor and 2) it's free
I've never even heard of those RAL loans, but I know I will never PAY somebody to do my taxes especially when ther're soo many free services...
just me, I gues I need to gone and file my taxes now :P