The Best Online Loans for People with Tax Liens

Dealing with tax liens can be stressful, especially when you need financial assistance. Whether you’re facing unexpected expenses, medical bills, or simply trying to consolidate debt, finding a loan with a tax lien on your record can feel impossible. Fortunately, some online lenders specialize in working with borrowers who have tax liens, offering flexible terms and reasonable rates.

In this guide, we’ll explore the best online loan options for people with tax liens, how to improve your approval chances, and what to watch out for when applying.

Understanding Tax Liens and Their Impact on Loans

A tax lien is a legal claim by the government against your property when you fail to pay taxes. It can severely impact your credit score and make traditional lenders hesitant to approve your loan application. However, not all lenders treat tax liens the same way—some are more lenient than others.

How Tax Liens Affect Your Credit

While tax liens no longer appear on credit reports (since 2018), lenders may still discover them through public records or specialized underwriting processes. If you have an unpaid tax lien, it signals financial instability, making lenders cautious. Paid or released tax liens are less damaging but may still require explanation during the loan application.

Best Online Loan Options for People with Tax Liens

1. Personal Loans from Alternative Lenders

Many online lenders specialize in bad credit or non-traditional borrowers. These lenders often consider factors beyond credit scores, such as income and employment stability.

Top Picks:
- Upstart – Uses AI to assess borrowers, sometimes approving those with tax liens if other financial factors are strong.
- Avant – Works with borrowers who have past financial challenges, including tax liens.
- OneMain Financial – Offers secured and unsecured loans, with higher approval rates for those with credit issues.

2. Secured Loans

If you own assets (like a car or home), secured loans can be an excellent option. Since the loan is backed by collateral, lenders are more willing to overlook tax liens.

Best Choices:
- Auto Equity Loans – Use your car as collateral (e.g., LoanMart, TitleMax).
- Home Equity Loans – If you have equity in your home, lenders like Discover or Rocket Mortgage may consider your application.

3. Payday Alternative Loans (PALs)

Credit unions offer PALs—short-term, small-dollar loans with lower interest rates than traditional payday loans. Some credit unions may approve borrowers with tax liens if they meet membership requirements.

Where to Apply:
- Navy Federal Credit Union (if eligible)
- Alliant Credit Union

4. Peer-to-Peer (P2P) Lending

Platforms like Prosper and LendingClub connect borrowers with individual investors. Some investors may be willing to fund loans for people with tax liens if the risk is justified by higher interest rates.

How to Improve Your Chances of Approval

Check Your Credit Report

Even though tax liens don’t appear on credit reports, errors or other negative marks might. Dispute inaccuracies before applying.

Explain Your Situation

Some lenders allow you to submit a statement explaining your tax lien. If it’s resolved or due to extenuating circumstances, this could help.

Apply with a Co-Signer

A co-signer with good credit can significantly boost approval odds. Just ensure they understand the responsibility.

Consider a Smaller Loan Amount

Lenders may be more willing to approve a modest loan than a large one if they see tax liens in your history.

Red Flags to Avoid

• Predatory Lenders – Avoid lenders offering "guaranteed approval" with extremely high APRs.
• Upfront Fees – Legitimate lenders don’t charge application fees before approval.
• Unclear Terms – Always read the fine print to avoid hidden penalties.

Final Thoughts

While tax liens can complicate loan applications, they don’t make borrowing impossible. By researching the right lenders, improving your financial profile, and avoiding scams, you can secure the funds you need. Whether through alternative personal loans, secured options, or credit unions, there are viable paths forward.