Taxes are inevitable, and filing your taxes in April cannot be avoided as well. When Americans file a return, they may be delighted to find that they’ve overpaid their taxes throughout the year, and the IRS actually owes them a refund. However, for many more, the opposite is happens: they submit their tax return, and discover that they’ve underpaid all year, and they now they are indebted to the IRS.

If you can relate to this situation, you might be scrambling to find out a suitable way to pay for your tax bill. For some, such as self-employed workers and freelancers who are paid directly by clients without an I-9 Form, they may have totally forgotten about their tax burden up until the bill is due. That can lead to a massive sum, especially for those who have neglected to file quarterly taxes all through the year.

Some taxpayers who wind up with a huge tax bill may be tempted by the thought of using a personal loan to pay down the balance. After all, the thought of the IRS coming after you with punishing fines and audits is enough to get you frightened. However, using a personal loan to pay taxes is generally not the most financially savvy option. First, let’s take a look at what really happens if you don’t pay your taxes.

What happens if you don’t pay your taxes?

It is a crime not to pay your taxes. It is punishable by fine and interest applied to your tax bill. Always keep in mind that paying taxes is your obligation as an American citizen or resident, and the government will penalize you for failing to meet that civic responsibility. Here’s a quick explainer on what you can expect if you fail to pay:

▪         First, those who fail to file their taxes by the April 15th deadline are fined 5% of their total tax bill. This accrues continuously until it hits a maximum of 25%.

▪         If you do file on time, but you cannot pay the full amount you owe, you will not be billed the above amount. However, there are other costs incurred by failing to pay your due by the due date. Unpaid taxes build interest at a rate of 3%, compounded daily, plus the current federal interest rate, compounded daily, plus an additional 0.5% failure-to-pay penalty, capped at 25% your principal amount.

▪         If your debt is large, and remains unpaid for a significant period of time, the IRS may enforce a levy on your assets. That’s a fancy way of saying they may directly confiscate your money, property, or car — and they may also garnish your wages and retirement.

What are personal loans?

A personal loan is a loan obtained from a bank, credit union, or lending agency that can be used for a wide variety of intentions. Commonly, they’re used for home renovations, planning a large expensive event like a wedding, or making a large purchase.

If you have a credit card, then you’re conversant with a more common type of personal loan. When you make payments with your card, you’re essentially borrowing that money from your credit card company. You have the month to pay it back, or, just like with any loan, interest will start to apply, increasing your total debt.

The price of and conditions applied to a personal loan varies. While a consumer with an outstanding credit rating (say, above 750) getting a personal loan from their local credit union may obtain an annual percentage rate, or APR, of only 6%. (APR refers to interest plus other fees, like origination fees.)

But someone with poorer credit, or someone who obtains a loan from an untrustworthy source like a payday loan shop, might experience an APR as high as 36%. The bottom line is that quality of personal loans is largely based on (a) your personal credit history, and (b) the institution you borrow from. Credit cards can work in a similar way, but often have even higher APRs.

So, if you are wondering if you can you get a loan to pay taxes, the answer is yes, depending on the conditions of your loan. Some lenders may spell out that you can only use the loan for certain purchases like an auto loan. Whether or not you can get a loan to pay taxes, though, might not be necessary a question as whether you should.

Should you use a personal loan to pay tax debt?

This is not an advisable thing to do; unless you can guarantee that the APR is lesser than what the IRS would charge for their installment plan.

That may however, be difficult to find, as the interest rate on many loans starts at 6%. If you have a really strong credit score, and you’re sure you can protect a personal loan at around 6% interest with a fixed rate, it may be worth it to use a personal loan to pay down tax debt. However, if it seems like a loan will cost close to 9% or 10% interest to finance, you might be better off with options.

That’s due to the fact that the interest rate for IRS debt works out to about 8%: the federal rate (around 5%) plus 3%, plus the extra 0.5% failure-to-pay penalty. It was found that the average personal loan cost 9.4 percent interest. Furthermore on that, the conditions applied to a personal loan can vary widely from lender to lender. A responsible lender, like a bank or credit union, might be easygoing on missed payments. But a payday lender, alternatively, could have eye-popping fees fixed to any failed requirement. So, for the average borrower, it might be worth sourcing elsewhere for a means to pay off IRS debt.

For a major number of consumers, the cons of using a personal loan to pay taxes may outweigh the pros.

Credit cards look like an even more disturbing choice upon closer scrutiny. The average APR on a credit card is 16.69%. Plus, for many, their credit card comes with a credit limit, a maximum amount they can charge to the card in a month. Based on the size of your IRS debt, that amount might be more than your credit limit anyway.