Whether you take a RAL out or not, tax preparation is a necessity for many Americans simply because the tax code is complex. That is a separate and distinct subject. Then of course Regulation Z (overseeing APR calcs) was devised for just that – “loans over one year”. It is not conducive for short term lending. In the case of RALs it requires a lender to state the APR as if the laon were being paid off every 11 days for a year (or 33 times). That’s not the case. Its paid once. But national banks must adhere to Reg Z in order toexport rate.

No one ever bothers to say RALs are low cost compared to many credit options for cash constrianed Americans (if they even have another option). BTW/ many don’t even have bank accounts to “direct deposit” into as you suggest. Simply telling people to “wait” for their money means you’ve never walked a mile in many of these customer’s shoes. Neither the IRS, consumer groups (or even you) can lend money at these rates…nor do they offer to. But the fact is, while RALs aren’t for everyone, the “need” for many still exists. Learn all the facts.

Let me ask you this….If I let you borrow $100 for 2 weeks because you had to buy a new tire for your car or else you wouldn’t be able to go to work and I asked you to pay me back $115 after 2 weeks, would keeping your job be worth $15 bucks? Yes it would. The interest rate would be 391% on that loan.

Capping the interest rate would mean I could only charge you $1.40 for that loan. It wouldn’t be worth me lending you the money, therefore you would not be getting to work, meaning you would loose your job, because I won’t risk $100 to make a dollar forty.

Annual Percentage Rates are based off, you guess it, Annually, yearly…not 2 weeks. Sure If I loaned you money for 2 years, a percentage cap would make sense. But not on a payday or short term loan. The banks are not going to lend money to these people who need help, therefore the people won’t get help. By the way for every 10 loans a loan company makes at least 10% of the borrowers don’t re-pay the loan…meaning if you made 10 $100 loans and charged $15 per loan you would expect to make $150 but if only 1 person did not repay the loan the company makes $35 for those 10 loans.

In other words, rate caps don’t work on loans less than $2,000 and terms less than 1 year and the people who need these loans (working families, and/or poor credit, and/or no bank account, and/or no credit history) would not be able to obtain any kind of loan to meet their needs, as retail banks would reject them either based on their credits score or the small amount of the loan.

You are cutting off your hand to spite your face.