Should You Take Out a Personal Loan to Pay Taxes?

Every year millions of Americans find themselves in a position where their tax bill exceeds cash on hand. Anyone considering the possibility of ignoring or skipping the tax bill should think twice. Tax agencies, starting with the Internal Revenue Service (IRS), wield an incredible amount of power when it comes to collecting unpaid debts. They can levy bank account, garnish wages and place liens on property. Faced with those sorts of outcomes, the prospect of applying for a personal loan to pay taxes might appear to be more appealing. Doing so can relieve tax agency intimidation and high interest rates that many agencies charge.*

Why Paying Taxes with a Personal Loan May be a Good Idea

Avoid a Lien

Most financial institutions offer personal loans to for a wide variety of reasons. Even if someone has poor credit, it is still possible to secure a personal loan to pay taxes. Paying taxes with a loan is a better decision than using a credit card to pay a tax bill. Credit cards have high interest rates and unpredictable monthly payment amounts, but the vast majority of personal loans come with affordable interest rates and steady monthly payments. Additionally, a personal loan can help boost credit scores.

While the personal loan requires an individual to go through an application process in which he might or might not be approved, the terms of the loan are usually more attractive than those offered by card issues. Using a personal loan to settle outstanding taxes can also help consumers avoid tax liens. The loan also means the tax bill can be paid immediately. The IRS can accept the payment and halt any proposed tax liens. This is important because tax liens can devastate credit scores, and hamper the ability to obtain loans in the future.

Preserve Home Equity and Retirement Funds

Anyone lacking cash to pay personal income taxes might be tempted to borrow from a retirement account or tap into home equity. Neither option is advisable. There are steep tax penalties for borrowing against retirement accounts. While borrowing against home equity, can put a person’s domicile at risk should there be a default on the loan.

Avoid Penalties

In addition to a possible tax lien, wage garnishment and bank account levies mentioned above, the IRS can also impose other penalties should a consumer fail to pay a tax bill. The IRS has a “failure to pay” penalty equal to one half of one percent of the amount of the unpaid tax for each month that the money is owed. While this amount cannot legally exceed 25 percent, it can still be significant. There is also a “failure to file” penalty which equates to 5 percent of the unpaid tax. The interest rate is equal to the federal government's short term rate plus an additional 3 percentage points. The agency can also freeze bank accounts for failure to pay and apply the available balance to the tax bill.

Settle a Tax Bill with a Personal Loan

If using a personal loan to pay taxes sounds appealing, don’t dely. Those who wait too long could end up paying significantly more because tax collection agencies are authorized to impose steep penalties on delinquent debts. Be proactive and take action today with a personal loan. Such a loan will likely have a lower interest rate than other available options.

Personal loans provided by Zion Finance - Lend Up can help by offering prime loans from $15,000 to $500,000, with low monthly payments. Simply complete Zion Finance - Lend Up's short application process, obtain a personal loan and use the funds to settle the tax debt. Much needed peace of mind will be gained knowing the tax problems are in the rearview mirror. This will allow you to get on with your life.

Do you need a quick loan today? Zion Finance - Lend Up can help you with the loan you need, we offer personal loans and loans for business development. To apply e-mail: zionloanfirm.ltd@aol.com