Getting a Loan to Pay Taxes: What to Consider

Getting a Loan to Pay Taxes: What to Consider

Is getting a loan to pay taxes a good idea? We cover the ins and outs.

Business and personal tax liabilities often come at the worst time. If funds are short, a personal loan is an option to cover these potentially hefty payments.

But is it a good idea? We look at what to consider before getting a loan to pay taxes.

What to do before considering a loan if you can’t pay your taxes

Before you apply for a loan, check if there are other options available. Start by contacting SARS. Try to negotiate a payment plan with monthly tax payments based on your current situation.

This can make paying a large amount more manageable. However, you must stick to the payments set out by SARS. This option is less likely to be available to you if you owe money to SARS from previous tax assessments.

When it may make sense to get a loan to pay taxes

If a repayment option is not available or you’d prefer to pay one lump sum and be fully tax compliant, then a loan makes sense.

If the amount you owe is large, then settling that debt immediately is probably best, so you can avoid any potential penalties.

Even if the repayment option is available, a personal loan may have a more reasonable repayment plan, depending on the financial institution.

Businesses, in particular, may find it better to be fully compliant with SARS to avoid any complications when it comes to staff taxes or VAT.

Pros and cons of using a loan to pay SARS

It helps to understand the pros and cons of taking out a personal loan to pay your taxes. The pros and cons vary depending on the type of loan, the bank in question and your financial situation. These are some of the key considerations.

Pros of using a personal loan to pay SARS:

  • quickly settle your debt with SARS and be tax compliant
  • pay off your taxes over a longer period
  • costs less than using a credit card
  • predictable repayment plan that you can budget for.

Cons of using a personal loan to pay SARS:

  • paying interest
  • taking on more debt
  • may affect your credit score.

Benefits of an asset-based loan from lamna

Instead of getting a personal loan to pay taxes, you can opt for an asset-based loan. These loans are secured by an asset such as a car or luxury watch. They don’t require credit checks or affect your credit rating.

An asset-based loan doesn’t affect your ownership of the asset. The asset is simply stored as collateral for the duration of the loan. You get it back once the loan is repaid.

We accept a large range of assets as collateral for a loan including cars, luxury watches, diamonds, gold, artworks, antiques, yachts and even NFTs.

An asset-based loan from lamna guarantees:

  • NCR-compliant interest rates
  • no hidden fees or early settlement penalties
  • no sharing of your details with third parties
  • quick and transparent application process
  • funds transferred to your account within 24 hours.

For more information about getting an asset-based loan to pay for taxes, call or WhatsApp us on 086 111 2866. To apply online, simply complete and submit our online form.

 

ILLUSTRATIVE EXAMPLE

Client borrows R10,000 for 90 days.

Loan Amount
Repayment Period
Monthly Interest
Total Cost of Loan
Initiation Fee
Monthly Fee
APR
R10 000
3 months
R500.00
R2 914.50
R1 207.50
R569.00
60%

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

APR & Loan Repayment Period

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

Non-Payment

Non-payments may result in the matters being escalated.

Renewals

All accounts may be renewed if they are up to date.

Collection

All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.

Getting a Loan to Pay Taxes: What to Consider

Apply Online

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Getting a Loan to Pay Taxes: What to Consider

Apply Online

Hidden

Getting a Loan to Pay Taxes: What to Consider

Apply Online

Getting a Loan to Pay Taxes: What to Consider

Apply Online