Loan for Tax Payment

Why Personal Loan For Taxes?

With no limitation whatsoever applied to the borrower on how they are using their personal loan amount, they can go ahead with paying taxes.
Personal loans provide you with fixed interest rates and pay-back plans than any other financing option.

• One major perk of personal loans is predictability. This predictability helps borrowers to plan. It also ensures that borrowers are not paying more than they have planned with interest.
• And if you have a good credit score, then you have the chance to be qualified for interest rates as low as 3%.
• Personal loan lenders work fast and approval usually happens within 48 hours. In most cases, personal loans do not require borrowers to submit their collateral.

List of Top Lenders Providing Personal Loan

When you apply for a personal loan, you’ll have to mention the reason for the loan. You must include the loan amount and choose the repayment period that works for you. It is advisable to check with multiple lenders so that you can find the best deal in the market.

Some of the best lenders are listed below with their minimum credit score and loan repayment period:

Some Other Feasible Ways For Paying Taxes

Personal loan comes with their own share of benefits. In the options given below, we have provided a brief detail of other methods to pay the tax bill.

Paying Taxes With a Secured Loan

Secured loans or Collateral loans can be secured against a property. It surely opens up larger loan options and more flexible tenure.

In secured loans, lenders are more flexible with their cut-off criteria.

However, it is not advisable to pursue the idea of taking loans for a very long period to settle tax liabilities. As it can create a risk, if you are unable to keep up with your monthly repayments.

Paying Taxes With A Credit Card

You can choose your credit card to pay your tax liabilities if your credit limit is equal to or higher than the total tax bill.

• It is one of the least expensive options if you have a card with no interest financing. No interest offers usually last between six and 24 months.
• Using credit cards to pay your tax bills is one of the cheaper options available in the market.
• However, the total interest rates on credit cards are higher if you fail to avail no-interest offers.

401(k) Loan

Taxpayers in the United States can take a 401(k) loan from their vested balance. You can borrow more than $10,000 or 50% of your vested account balance up to $50,000. The vested balance is the amount contributed by the employer of your company and you while you are working there as an employee.

Yet, while availing a 401(k) loan consider that the borrowed money will stop gaining value in the market. Which can affect your retirement plans, in the long term.

What Will Happen If You Don’t Pay Your Tax Bill?

Please note. After April 15th, the IRS will proceed its charges on the tax amount you owe. Here, Interest rates are determined by adding 3% to the federal short-term interest rate. Federal short-term interest rates are set by the government every 3 months.

1. Penalties Charged: Failure-to-pay penalty of 0.5% per month will be charged. However, the IRS may remove the charges, if you have a “reasonable cause”. The failure-to-pay penalty can go maximum up to 25% of the total balance due.
   There is a minimum penalty for late filing if your tax return is over 60 days. Either you will pay 100% of the tax or 485$, whichever is less.
2. Levies and liens: You can expect letters from the IRS, with the details of the tax you owe. After which you can be issued a Notice of Intent to Levy. After receiving the Notice of Intent, you get 30 days to pay your balance or appeal to levy with the IRS. In case you owe $10,000 or more, a lien may be placed on your home.
3. Other Consequences: In some cases, the State Department can refuse to issue or renew your passport.

If you are struggling to get money to pay your tax bill, taking a personal loan is a good option. If you have a good credit score and a continuous source of income, personal loans become a quick and simple way to get hold of cash with low-interest rates. Plan for the tax season to avoid unwanted stress. And always take the help of professional advisors for the perfect market insights.