At the height of tax-filing season an Iowa lawmaker has filed a bill that would regulate tax refund loans. Senator Joe Bolkcom, a democrat from Iowa City, wants limit the interest rate on such loans to no more than 21 percent. He’d also force lenders and tax-preparers to prominently display and disclose the terms of tax refund loans. “We want people to steer clear of these high interest loans,” Bolkcom says. If you file your taxes electronically, your refund should be deposited in your checking account within two weeks. The Iowa Coalition Against Abusive Lending estimates “instant refund loans” cost Iowans 13-MILLION dollars a year in interest. Bolkcom says much of that comes out of the pockets of low-income Iowans who pay anywhere from 70 to 700 percent interest to get their refund immediately. “For some reason, protecting consumers against high interest rates in these predatory type of loans has gone out of style and we’re here today to suggest that consumers across the board need protection,” Bolkcom says. “Just because lenders are able to charge those kind of rates does not make it right.” Republican legislators have resisted previous attempts to regulate tax refund loans, but Senator Bolkcom hopes the new make-up of the state Senate — the even split of 25 republicans and 25 democrats — gives his bill a better chance. “Iowans believe, I think, that they’re getting some amount of protection from state government in these forms of lending and they’re surprised to learn that we’re not involved at all in establishing some sort of ceilings on these fees,” Bolkcom says.
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