Maybe you’ve just bought a new home or found your ideal rental. Perhaps you’ve even paid the down payment or wired the security deposit. While it probably feels as though you’ve already overcome the largest hurdle, know that moving can be another major expense you’ll need to prepare for.
Taking out a personal loan for moving can be a helpful way to spread out your expenses over a longer period of time. Follow this guide to find the best personal loans for moving.
Best Personal Loans for Moving
Moving-related expenses include buying new furniture, hiring movers, renting transportation, storage, insurance or even a short-term hotel stay before you officially settle in. All these costs can quickly add up and you could easily find yourself spending money more than you anticipated.
One way to ease the financial burden is by taking out a personal loan. You can take out a personal loan before you move to pay off expenses as they come up. Or you can take out a personal loan after you’ve moved if you find yourself short on cash. Either way, a personal loan can help turn a large expense into a more manageable bill.
Many personal loans come with low-interest rates, fixed payment schedules, flexible repayment terms and can be approved quickly. These are our top picks for the best personal loans for moving.
Types of Personal Loans for Moving
Depending on your credit score and financial situation, there are a variety of personal loans you can take out that will help with the cost of moving. Different loans have different terms and requirements. It’s important to be familiar with all types of personal loans before agreeing to borrow money.
If you feel that a personal loan for moving would be beneficial, it’s time to get an idea of the most common types of loans you could be offered.
A secured loan is a personal loan that is guaranteed by collateral or an asset you own. Collateral can be anything that is valuable — your home, car, jewelry, antiques, an investment portfolio or art. The most important factor is that you are the owner of the asset and its value is high enough to cover the amount of money you’ll owe.
Secured loans are common options for people that have no credit history or low credit scores. While they can be a great way to obtain much need cash without a credit check, these loans can be dangerous if you are unable to pay back the money you owe. You’re at risk of losing the asset you’ve put up for collateral if you can’t meet the loan’s terms.
Unsecured loans don’t require you to put up any collateral in exchange for borrowing money. Instead, lenders will look into your credit score and income levels to determine whether you are eligible to borrow money.
Unsecured loans can charge different interest rates and fees depending on the lender. If you have a healthy credit report and a steady stream of income, you should have no problem getting approved for a personal loan at a low-interest rate.
A fixed-rate loan is a type of loan where the interest rate remains the same for the duration of the loan. Auto loans, student loans and mortgages are common examples of fixed-rate loans. Fixed-rate loans can work in your favor if you are able to lock in your loan for a low-interest rate. The main risk with fixed-rate loans is locking in a long-duration loan at a high-interest rate.
Homeowners locked into 30-year mortgages at high rates often run into this issue and are left scrambling to try to refinance when interest-rates go down. However, most personal loans for moving generally have a duration of up to a couple of years. So, you’ll be less likely to run into these kinds of problems.
Personal Rate Loans
Most people take out personal rate loans when they are trying to cover a personal expense, like moving. Personal rate loans are often unsecured, fixed-rate loans with a set time duration. Lenders will typically look into your credit history, existing debt, income level and other factors to determine whether you are eligible.
Personal Loan Requirements and Criteria
Most lenders will look into your credit report when deciding whether to approve you for a personal loan. If you don’t have a credit history or if your credit score is poor, you’ll have a harder time securing a personal loan. In this case, your options will be limited and you may have to accept a high-interest rate or agree to a collateral loan. Some other factors lenders typically require from you include:
- Steady income
- Debt-to-income ratio
- Payment history
- U.S. citizen or legal resident
- Minimum age (usually 18 but varies in different states)
Personal Loan Considerations
There is always some amount of risk when you are borrowing money. You could have trouble repaying your loan if you lose your job, interest rates go up or in the event of a financial shock. If you make late payments or are unable to meet the terms of your loan your credit score will be negatively affected. A poor credit score can make it difficult to get a new home, get a car and even find a place to live. If you take out a collateral loan and are unable to repay your debts, you could end up losing your home, vehicle or other important assets.
Although the prospect of a large sum of cash can seem enticing, remember that interest rates and other fees can quickly add up and ultimately harm your finances. It’s important to never borrow more money than you’ll be able to pay back. It’s also important to thoroughly read through and understand the terms you are agreeing to.
Remember to avoid predatory loans at all costs. Predatory loans impose unfair or abusive terms on borrowers. Often lenders may try to coerce, force or hide important information from you to try to get you to agree to terms that will benefit them at your expense. These loans can be dangerous. They come with high-interest rates and fees that can leave you in a cycle of financial debt and ruin your credit score.
Make sure to only work with licensed lenders. Avoid any loans that sound too good to be true. Be alert to lenders who rush you to sign documents, leave blank spaces in documents or offer packaged services.
Personal Loans vs. Credit Cards
Personal loans offer a lump sum of money for a fixed-interest rate and set duration. Credit cards often come with variable interest rates and a continuous credit line. Credit cards offer more flexibility than personal loans. With a credit card, you can get by making the minimum payments on your balance and you’ll have access to credit so long as you continue to pay off your balance.
On the other hand, credit cards often charge higher interest rates than personal loans. You’re also more likely to fall into debt when you rack up a balance on your credit card than if you were to take out a personal loan.
Borrowing Money for Moving
Getting approved on a personal loan for moving will depend on how much you intend to borrow, your financial health and the lender’s requirements. It’s a good idea to shop around for different lenders to find the best interest rates and the payment plan that best suits your situation. Remember to always thoroughly read and understand every document you sign. In all, a personal loan is one way to make your moving process easier.