16 Dec Do Outstanding Taxes Impact Loan Applications?
When filling out a loan application, you will be required to provide your personal information along with other specifics like the type of loan or amount for which you are applying. Most lending firms are more than happy to see that you qualify for a loan. After all, that is how their business makes money. They will discuss possible payment terms until they find one that works for you and their firm. Along with several other requirements, they will ask if you have any other existing loans or outstanding unpaid taxes, which can negatively or positively work in your favor.
Negative impact of outstanding taxes on your loan application
Outstanding taxes might be red flags, but they do not necessarily mean you will not be approved.
Even if it is due to negligence, the bottom line is that you are there to fix your financial problems. You will be asked to submit your latest financial statements, your credit history, and other documents to support that your cash flow can cover your loan. If your outstanding personal taxes are because of your struggling start-up business you started with friends, they will look into how you manage your expenses. These are filed separately. If your personal taxes show that your mortgage taxes are up to date, they might show some consideration.
There are loans such as personal loans, credit card cash advances, or even payday loans that may not even ask if you have outstanding tax dues. Their only concern is if you will be able to pay them back. But the loan offers may not be enough for you to get out of the problem you are in once the interests and processing fees kick in.
Positive impact of outstanding taxes on your loan application
For loaning firms, your outstanding taxes might be a positive thing. The bigger the taxes you owe, the more money you are planning to loan from them to cover payments, which is more profit for their business. With bigger loans such as business loans or home-equity loans, you will be required to submit more requirements such as your recent bank statements and payslips. You will be required to have some form of collateral, such as your home or car.
Establishments such as these are more than happy to listen. Be upfront and tell them how you got yourself into that situation and that their services can resolve the problem. Tell them about your job, how long you have been working there, how much you make, upcoming bonuses that you might be receiving or, maybe you are up for a promotion. If you have any investments or other sources of income, this will also be helpful.
Your outstanding taxes can impact your loan applications negatively, but you can turn it into a positive situation by taking that first step by fixing your finances. It’s time to get back on track. If you have any questions on other kinds of support you can get when it comes to your taxes, we invite you to contact the Golden Tax Relief team.