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Monday, September 13, 2004 - Page updated at 12:19 A.M.
That spirit powers a Seattle City Council effort to ensure that borrowers who use tax-refund anticipation loans know their full costs, obligations and options.
These loans represent advances on expected tax refunds, and they are made by banks but brokered through tax preparers. The appeal for borrowers, especially low-income clients, is fast cash. They get money quickly, but with fees and what can be stiff interest rates.
Customers can decide for themselves if they get value for the service, but they need to be fully informed of the costs and of tax-filing options that provide returns quickly and at less expense than a tax-refund anticipation loan.
Such a measure sponsored by City Councilman Tom Rasmussen passed out of council committee with a 3-1 vote. The full council weighs in next Monday.
Rasmussen's legislation would disclose the annualized interest rate, a comparative date when a refund could be expected via electronic filing, and the amount the consumer receives after fees are applied.
The legislation is not about industry regulations or caps on interest rates, only disclosure.
Seattle has a chance to create model legislation for the state. Let this loan service stand the test of a fully informed marketplace.
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