Rent-to-own stores offer a pricey way to buy goods, but there are equally costly ways for low-income consumers to borrow money.

In a world of alternative lending, consumers desperate for cash turn to pawn shops and other storefront lenders to obtain loans against their jewelry, paychecks, cars or almost anything else they can muster - even their income tax refunds.

"There's a whole separate genre of consumer exploitation exclusively targeted at low-income consumers," said Stuart Rossman, litigation director at National Consumer Law Center.

Tax "refund anticipation loans" are among the most common and controversial of these short-term loans offered outside traditional banking.

Often advertised as "rapid" or "instant" refunds, taxpayers get them through paid preparers, such as Jackson-Hewitt or H&R Block.

Traditionally, these firms prepare returns for a fee, and refunds arrive in as little as eight days if done electronically. If the customer doesn't want to wait, tax preparers will offer them a bank loan for two weeks or less.

But it's not cheap.

There's typically a $30 fee to set up a temporary bank account. There's also a $30 to $130 loan processing charge, depending on the size of the refund, and whether the customer wants the money within 48 hours or the same day. And some preparers charge a $30 application fee. That's all on top of tax preparation fees that average $146 for these customers.

The loan is repaid when the IRS deposits the refund into the temporary account. But if the IRS challenges the refund - delaying or reducing it - the loan is still due.

Chanell Rose took that path this year. The 27-year-old single mother was hurt in a car accident in March 2005 and needed cash to pay medical bills and feed her family. She went to H&R Block and paid $140 to get her taxes done, and $90 more for the refund anticipation loan.

That represented an annual interest rate of about 180 percent for a two-week loan on her $1,300 refund. That normally would exceed interest caps in many states. New York, for example, bars small-loan rates over 25 percent.

But H&R Block and other preparers get around that by using out-of-state banks, like Delaware-based HSBC Bank USA, to make loans. These banks are often headquartered in states without interest limits - like Delaware - so it's that state's laws that apply.

In 2004, about 12.4 million Americans paid $1.24 billion in tax loan fees, according to IRS data compiled by National Consumer Law Center and the Consumer Federation of America.

Three-fourths went to low-income workers who get the Earned Income Tax Credit. "The whole point of the [tax credit] is not to make profits for the tax preparers," said Robert Manning, consumer finance professor at Rochester Institute of Technology.

Tax firms have faced numerous lawsuits over how they market the loans and disclose their terms. H&R Block, the nation's biggest preparer, has paid tens of millions of dollars to settle dozens of these cases.

"I have a huge issue with refund anticipation loans, but if somebody goes into one of these places, there's not a lot we can do," said New York bank superintendent Diana Taylor.

Under pressure from consumer activists, H&R Block began to better inform customers of all fees and other options. The Kansas City-based company says it makes sure people know borrowing against their tax refund is a loan and tries to discourage them. But it still promotes it with big signs.

"We'd like clients to choose something other than a [loan], but low-income clients need to be able to make the choice," said vice president Bernie Wilson.

Equally controversial are "payday" loans, which is borrowing money for about two weeks against a paycheck or post-dated check written to the lender. Like "title" loans - which put the car up for collateral instead of a paycheck - payday loans are denounced by consumer advocates and are illegal in New York State. However, consumers can get them online.