How to Get a Personal Loan to Pay Your Taxes

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

man calculating taxes to see how to pay for taxes using a personal loan
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

The only thing worse than owing taxes to the IRS is not having the money to pay them.

Considering Bankrate found 61% of Americans don’t have enough saved to cover a $1,000 emergency, you might not have cash on hand to cover an unexpected tax bill.

While there are several options for paying what you owe, one option could be using a personal loan.

Read on to learn more about this approach, along with tips on how to get a personal loan to pay your taxes.

How to get a personal loan to pay your taxes

Personal loans are installment loans, typically with fixed monthly payments, that you can pay off over time.

If you’re wondering how to get a personal loan to pay your taxes, rest assured you have lots of choices. In most cases, you can use a personal loan for just about anything. But some lenders have restrictions. So ensure the lender allows you to use it for taxes.

But make sure tax repayment is one of the acceptable uses before you borrow.

Online lenders such as Earnest and Avant make it easy to apply online and get funds in your account fast. They also offer rate quotes so that you can see if you pre-qualify for a loan after entering a few basic pieces of personal information.

Also, some lenders such as Upstart and Payoff charge origination fees, though there are lenders such as SoFi that charge none. Interest rates can also vary by lender, though FreedomPlus offers fixed rates as low as 4.99%.

You might also consider peer-to-peer lenders such as LendingClub. These companies also let you apply online, but your loan will be funded by an individual investor, rather than by an institution.

Finally, you could go with personal loans from traditional banks or credit unions, especially one with whom you already hold an account. You might get special interest rate discounts for being a customer.

Just as you should explore your options for paying your taxes, it’s also useful to compare offers for multiple personal loans to find the best one.

What you need to qualify for a personal loan

As for how to get a personal loan to pay your taxes, you typically need:

  • A strong credit score, likely 640 or higher
  • A low debt-to-income ratio
  • Sufficient income to pay back the personal loan

If you don’t meet these requirements, you could apply with a creditworthy cosigner who does, or opt for a secured personal loan. A secured loan requires collateral, such as the value of your savings, investments, car, or home.

Although secured personal loans tend to have low rates, they can be risky. If you can’t repay the loan, the creditor could seize your collateral. So make sure you have a solid plan for repayment before risking your assets.

Determine if the IRS payment plan is cheaper for you

With an IRS payment plan, you can pay your taxes back over a period, rather than all at once. But the IRS will charge you:

  • Accruing interest on your unpaid balance until it’s paid off
  • A penalty fee of 5% or more on the amount you owe if you’re filing late, up to a maximum of 25%
  • $135, or 100% of the unpaid tax (whichever is smaller), if your return is more than 60 days overdue
  • Other penalties and fees where applicable

If you’re on a long-term IRS payment plan with more than 120 days of automatic withdrawals from a checking account, you’ll also pay a $31 online setup fee, or $107 if you apply by phone, mail, or in person. These fees are reimbursed, however, if you qualify as low income.

If you don’t have automatic withdrawals on your IRS payment plan and you’re paying in more than 120 days, you’ll pay a $149 online setup fee. If you’re applying by phone, mail, or in person, you’ll pay a $225 setup fee. If you’re low income, it’s a $43 setup fee that might be reimbursed if you meet certain conditions.

Ultimately, an IRS payment plan could still cost you less than the interest and fees you’d pay on a personal loan. But it’s useful to compare costs to see which one is the better option, especially if you can qualify for a low-rate personal loan.

“Sometimes, it’s wise to take a loan to pay taxes if the late fees [and] interest rate that the government would charge are higher than the interest rate a lender would charge you,” said Priyanka Prakash, a financial writer at Fundera, a small-business loans platform.

If you owe local fees, Prakash also said to watch out for interest rates and fees charged by state and local governments.

“When you add all of these up, the penalties are pretty hefty,” she warned.

You could also use a credit card to pay your tax bill, though you might get charged a fee just under 2% by the IRS. Consider using a card with a 0% APR promotional period to minimize interest. But you want to make sure you can pay off your balance before the promotional period comes to an end.

Improve your financial habits for next year

When it comes to paying your tax bill, the advice is simple: Find the option that costs you the least amount of money in interest and fees. Our personal loan calculator can help you do the math on interest rates and fees.

Besides figuring out how to get a personal loan to pay your taxes (or using another method), you might also make changes so that you don’t find yourself in the same situation next year.

You could readjust how many exemptions you claim on your W-4, for instance. You could also revamp your budget and start saving an emergency fund.

By setting aside enough savings, you’ll be prepared to cover unexpected expenses, such as overdue taxes, without having to go into debt.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.73% – 29.99%$1,000 - $50,000
Check rate nowon SLH's secure site
6.28% – 14.87%1$5,000 - $100,000
Check rate nowon SLH's secure site
6.87% – 35.97%*$1,000 - $50,000Visit Upgrade
8.00% – 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
4.99% – 29.99%$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
5.99% – 35.89%$1,000 - $40,000Visit LendingClub
5.49% – 18.24%$5,000 - $75,000Visit Earnest
9.95% – 35.99%$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.