Stress and high costs are equal parts of every move. All the anxiety that comes with packing up your entire life in boxes is nothing compared to the headaches that moving expenses can bring. Not planning your moving budget and costs properly can cause serious last-minute issues. That’s why it’s essential to see how much cash you have and how much money you’ll need. Based on these calculations, you’ll know whether you should apply for a moving loan.
A personal loan is one of the fastest and more convenient ways to procure funds for the move. The best thing about moving loans is that they target borrowers with both good and bad credit. They’re also designed to meet the needs of people who need to relocate. If you want to learn more, we’ll be going over some of the benefits, cons, and alternatives to personal loans in this article.
What Is a Moving Loan?
Moving loans are a type of unsecured personal loan used for relocation expenses. This loan covers all moving costs like hiring movers, renting a truck, or even getting new furniture for your place.
Luckily, with unsecured moving loans, you don’t have to place collateral on your assets. Deposits for moving expenses entail fixed interest rates and repayment terms, so you’ll know upfront how much you owe and when to repay the loan.
Main features of relocation loans:
- Easy to get
- Fast cash assistance
- Safe and secure
- You can get them online
- Medium to high APR
- Transparent terms
- Open to Americans with bad credit
- Available in various amounts
- Created to cover moving expenses
Cash advances for moving expenses can range from as little as $1,000 and up to $50,000 with most online lenders. Of course, state regulations may limit the maximum loan amount. So, it’s important to enter your ZIP code in our application form to check what options are available to you.
Interest rates and fees also vary, and the APR can stretch from $5.99 to $35.99, depending on your credit score. Moreover, loan terms range from one year up to seven years. Borrowers must then cover fixed monthly payments throughout the term, plus interest and origination fees.
Can I Get a Personal Loan to Move?
Whether taking out a personal loan for a move is the right choice depends on your needs and financial circumstances. The type of move and the estimated moving cost will influence which loan amount you’ll need.
Taking out a 1000 dollar loan to pay for a move across town will probably make sense in most cases. If you’re relocating across states and to a larger house, you might need a larger moving loan amount. The situation could be far worse if the relocation comes suddenly and unexpectedly.
If you have done your homework and have а good credit score, a personal loan could be an ideal option. Try to get accurate moving quotes by calculating the moving costs. Once you know how much you need to borrow, you can adjust your budget accordingly. Remember to check out the terms and conditions of the loan before applying.
Can I Borrow a Moving Loan With Bad Credit?
As stated previously, most moving loans are unsecured personal loans. Meaning, you won’t have to place an asset, such as your vehicle or house, as collateral. An unsecured loan will affect your credit score since lenders run a hard credit check to verify your ability to repay. Even if the lender only performs a soft check, it’s more difficult for bad credit scores to secure reasonable loan terms.
What you should do is try to improve your credit score before applying for a moving loan. If that’s not doable, go for lending products like moving loans for bad credit. These financial products will be more likely to work out a viable solution for your situation. Since lenders risk their assets on borrowers with bad credit, you should expect higher interest rates and fees.
Where Can You Get Relocation Personal Loans?
You can submit an application for a moving loan both in-store and online. Both bank institutions and credit unions approve relocation loans for various moving costs. Alternatively, online lenders offer the same types of products but with looser criteria for any loan purpose. What distinguishes online lenders from traditional lenders are loan terms and rates, loan amounts, and interest rates and fees. The minimum credit score and the repayment period will also vary, depending on your financial background.
How Much Will a Moving Loan Cost Me?
The size of your monthly payment depends on multiple factors, like the loan term, credit score, and annual income. Let’s say you want a moving and relocation loan with a one year term and a 5.95% interest rate. Your yearly revenue is $50,000, and the loan size is $10,000. The monthly payment will be about $860, and the total interest you’ll pay is around $325.
This is just an example of what to expect, so don’t take it as gospel! Applying for a longer term will decrease the monthly payments but will probably increase the total interest you’ll need to pay. For instance, if the loan term is five years, the payment will be only $193 a month. However, the total interest paid will be significantly higher at $1,585. Where you live may also affect the APR, fees, and borrowing opportunities.
If you apply for a moving loan through our website, our lenders will provide you with all the fees and costs upfront, so you’ll know precisely how much the product will cost you in total.
How to Apply for Moving Loans?
Having a good credit history increases the chances of qualifying for a low interest-rate moving loan. If you don’t fall in this category, focus on improving your credit and lowering your debt-to-income ratio. This way, you can increase your chances of qualifying for a personal loan. If you are ready to apply, check out the steps below:
- Do thorough research: Research how much it will cost to relocate and what your total moving expenses will be before you apply. As lenders give the total amount of the loan, it may not be possible to borrow more if you are short on covering the expenses.
- Find reputable lenders: Look for reputable lenders with positive online reviews and satisfied customers. At DirectLoanTransfer, we offer hundreds of financial companies to choose from. To get reasonable loan terms, seek the lowest possible APR for your financial situation.
- Pre-qualify: Don’t apply straight away without pre-qualifying first. This way, you can be sure of the loan amount, rates, and monthly payments you are eligible for. Pre-qualifying won’t affect your credit score, and you can compare offers from several lenders before borrowing.
- Select an offer: Choose the offer with the lowest APR and best loan terms available. By doing so, you ensure you get the best value for your loan payment.
- Get documentation in order: Once you’ve selected your offer, gather all necessary documents. Have your ID card, SSN, W-2s, and paychecks at hand. Having all documents ready could help you apply within minutes and get funded faster.
- Submit your application: With everything ready, it’s time to apply for a moving loan. The loan application process typically lasts about five minutes. Before being approved, the lender will probably carry out a hard credit check.
- Receive the funding: Once you’re approved, expect to receive the funds within a day. Often, a loan could get delayed for a couple of days in case of bank delays and applying on a non-working day.
- Make a repayment plan: Always repay on time and don’t miss a payment. This way, you’ll build your credit score and avoid late fees and penalties. In case you can make extra payments or pay the loan off earlier, you could end up saving money on interest.
Advantages of a Moving Loan
When weighing down the pros and cons of a moving loan, consider the following benefits for getting a personal loan for relocating:
- Unsecured loans: This type of product is an unsecured personal loan for moving. So, you won’t need collateral for this type of loan. There’s no risk of losing your assets if you’re unable to pay off your debt.
- Acceptable interest rates: For those with an excellent or good credit score, getting a moving loan is easy and convenient. They can get a lower rate on personal loans than on any credit card. The average rate for borrowers with excellent credit stands at 13.9%, which is affordable for most customers.
- Fast application and funding: If you are in a hurry to move, some lenders approve applications within one business day. Most loan companies can deposit the approved amount up to a couple of days after applying. To speed up the transfer, ensure you submit all the necessary documents.
- Higher loan amounts: Borrowing limits for moving loans can be pretty high. Borrowers usually get access to large loan amounts that range from $1,000 up to $50,000. The minimum loan amount typically depends on your credit score, income, and repayment capacity.
- Fixed interest rate and monthly payments: Personal loans have predictable interest rates and a set monthly payment. This will make it easier to budget the extra monthly expense for the time of the loan.
- Lower APR than credit cards: The APR of most credit cards is about 20%. Conversely, applicants with good credit may qualify for an interest rate of around 7% with a personal loan.
Disadvantages of a Moving Loan
Though moving loans bring several benefits to users, they don’t fit all budgets. Depending on your financial situation, personal loans have several downsides, too.
- Interest is inevitable: If your credit is below 629 or you already have debt, any personal loan will be an expensive solution. With bad credit, expect APRs that may exceed 30% and cap at 36% in some instances.
- Lenders might reject bad credit scores: Borrowers with excellent FICO scores usually get loans with competitive terms. On the downside, if you have bad credit, you might not be approved. If you are approved, the loan terms usually have high interest rates.
- Long-term debt: A personal loan term can extend up to seven years. Even after settling in your new home, you may be subject to financial expenses for a long time.
- High fees: Besides high interest and APR rates, other fees may be applicable too. Some lenders apply origination charges and deduct those from your loan proceeds or add them to your balance. An average origination fee stretches from 1% to 8% of the loan amount. For instance, a $5,000 loan with a 6% origination fee of $300 would net you $4,700.
- Financial impacts: Not repaying personal loans for moving on time can damage your credit history. Missed payments may also increase APRs and add penalty fees. Plus, the owed amount can get referred to a debt collector.
Alternatives to Loans for Moving
Having saved enough money for your relocation is the least expensive way to cover moving costs. If you don’t have an emergency fund, there are alternative ways to finance your move. Before you decide to borrow money, check the options below to find the most affordable funding for your move.
- Employer relocation package: Most people who relocate probably do so because they got a new job. So, why don’t you ask your company to help cover some of the moving costs? Lots of companies offer a relocation package, which you can find out through the HR department. The relocation package usually covers the employee’s moving and work-related expenses.
- Credit unions: Most federal credit unions approve a loan amount that starts at $500. Under federal law, the maximum APR you may qualify for is 18% for credit unions. Lenders use your credit history when you apply. So if you need a moving loan fast, you may get quicker approval than with a bank loan, even with an average credit score.
- Create a budget in advance: You’ll probably have several months before you’ll relocate. Use the time needed to secure the new lease or mortgage wisely. Start saving any extra income you are earning to cover the moving costs without having to borrow.
- Credit cards: Using a credit card to pay for moving expenses is a possible option. Applicants with excellent credit may get an interest-free, 0% APR credit card. You’ll pay no interest this way if you pay back within the 12 or 18-month promotional period. If you can’t get a 0% APR credit card, make sure you pay off the entire debt by the time the bill is due to avoid paying interest.
- Friends or family members: If you have no money and bad credit, consider getting a loan from family or friends. Borrowing from close relatives means you won’t pay interest, and your credit score won’t suffer. Remember to borrow responsibly, only what you need to move, to avoid risking your relationship. Pay back whatever you owe in due time and always offer to pay a fee for the favor.
- Sell some of your things: Do you need all your designer clothes? Have you got some bulky sports equipment that catches dust? Selling unused valuable items will boost your budget and reduce the moving costs. List items for sale on sites like Nextdoor, Facebook, Letgo, Craigslist, or visit antiques and thrift shops. Alternatively, you can organize a yard and garage sale to get rid of your unwanted items and make some cash.
Moving can be both a costly and nerve-wracking process. Struggling with moving truck organization and relocation costs is a heavy burden to take. If you can’t pay out of pocket for these expenses, think about taking out a personal loan.
Before you take the final step, always consider all financing options, including bank and payday lender loans. Whatever funding option you opt for, ensure to read all the loan APRs, fees, and other payment terms.