Before deciding on this route, make sure you talk to a financial expert and confirm that you can afford it long term. Here is a list of items to consider when assessing a loan designed to pay off your property tax bills: • Gather as much information as possible about the interest rate for the credit for which you’re applying. Some creditors have as much as an 18% interest rate! • Check the interest rate on your property taxes. If you don’t have good credit, a fact that will be reflected in high loan interest rates, it’s probably better to pay 5% interest on your property taxes, versus the higher interest rate on a loan. • Be sure to consider the additional cost of any penalties or other fees that could be charged to you. For example, in California, if you don’t pay your property taxes by the December 10 due date, a 10% delinquency penalty is immediately assessed. If the bill isn’t paid by April 10, an additional 10% penalty is assessed. After July 1, you’ll be charged 18% interest. Further, you may also have to pay other fees and penalties. • Determine and calculate all extra fees you’ll be charged with; for example, the tax collector may charge a fee on the tax certificate auction. They may also charge a redemption fee. In the long run, all these fees may be more expensive than paying a higher interest rate. While it may seem like a fast, easy solution in a time of crisis, contracting for a loan to pay the delinquent taxes on your property is not always the best thing to do. While appealing in the short run, high-interest tax delinquency loans usually end up increasing the overall debt of the owners and placing even more stress on their financial situation. 32
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