Should You Get a Personal Loan for Moving Expenses?
Moving Loans Can Make Paying Moving Costs Easier
Making a move to pursue a new job opportunity or just get a change of scenery doesn't always come cheap. According to Moving.com, the average cost of a local move is $1,250, while a long-distance move costs $4,890 on average.
The actual amount you pay for a move depends on several factors, including:
- How far you've moving
- How much you have to move
- Whether you're hiring professional movers or taking the DIY option instead
- Whether you need to put any of your things in storage temporarily
Your total moving budget for a local move might include renting a truck, paying movers (or your buddies to pitch in and help), buying boxes and packing supplies and paying temporary storage fees. A move across the state or across the country could add other expenses, such as shipping fees for larger items or travel costs for yourself and your pet.
When planning your moving costs, one thing to consider is how you'll pay for it all. If you'd prefer not to drain your cash savings, then a credit card might be an option. A personal loan, however, could be the better choice. If you're not sure where to look for moving loans, consider these options.
Moving Loans From Banks and Credit Union
The first place you might look for a personal loan for moving expenses is your bank or credit union. Both can offer personal loans or lines of credit to help pay moving costs or just about any other expense. The difference with a line of credit is that it's usually revolving, meaning you can draw against it as needed. A personal loan would give you a lump sum of cash for moving expenses.
Getting a personal loan from a bank or credit union may be easier if you have an established banking history and good credit. Both can help you qualify for a lower rate on a personal loan and some banks sweeten the deal further by offering relationship discounts on loan rates.
In terms of cons, one of the biggest may be speed. Getting a loan from a bank or credit union may be a slower process compared to getting a personal loan online. It may take several days for the loan to be approved and funded which might not be convenient for your moving schedule.
Another potential drawback is that banks and credit unions may require you to offer some kind of collateral for a personal loan if you don't have great credit. For example, you might have to pledge some of the money you have in a savings account or CD to secure the loan. If you don't have those assets, it could be harder to find a bank that will approve you with poor credit.
Moving Loans From Online Lenders
Online lenders are an appealing choice if you're looking for a personal loan for moving expenses due to several reasons.
- First, online lenders make personal loans to people with a wide range of credit backgrounds. There are personal loans for people with excellent credit as well as personal loans for people with bad credit. In that sense, getting a personal loan through an online lender may be easier versus getting a loan through a bank or credit union.
- Second, personal loans from online lenders are typically unsecured. That means you don't need to have collateral to get a loan, which again, is an advantage you may not necessarily enjoy with a bank loan.
- Another benefit has to do with the loan terms and interest rates. Online lenders can offer generous borrowing amount–SoFi, for instance, offers personal loans of up to $100,000. While your move may not cost quite that much, it's good to know that you could get access to that amount of funding if necessary.
- Interest rates from online lenders also tend to be competitive with what banks or credit unions offer, and they may be lower compared to what you'd pay to charge moving expenses to a credit card. The average credit card APR on accounts assessing interest is right around 17%, which is significantly higher than the rates you might find with online lenders. With Lightstream, for example, it's possible to get personal loans with an APR as low as 5.95% with automatic payments.
- Getting a personal loan online can also be fast and convenient. With some lenders, it's possible to fill out the application in just a few minutes, get an approval decision the same day and receive loan funding in 1 to 2 business days. That could be important if time is of the essence for a move.
What you have to keep in mind about getting moving loans from online lenders is that the best rates are usually reserved for people with the best credit. If you have a lower credit score, it's possible your APR could easily outstrip what a credit card might charge. It's also important to look out for fees since some online lenders charge origination fees for personal loans.
Alternatives to Using a Personal Loan for Moving Expenses
In place of a personal loan, there are other ways to cover moving expenses. For instance, you could:
- Use a 0% interest credit card
- Borrow from friends and family
- Take advantage of reimbursement or relocation benefits through your employer
- Reduce your moving expenses and use savings to pay the cost
Also, consider how you could find extra cash to pay for a move. If you're decluttering ahead of the move, for instance, you could sell off things you were planning to donate or throw away. Another way to save: ask for discounts.
Moving truck rental companies, for instance, can offer discounts if you belong to certain membership programs, like AAA. And some offer loyalty rewards programs that let you earn discounts when you rent out trucks.
What to Do Next When Planning a Move
If you've decided to use a personal loan to pay for a move, keep these tips handy:
- Add up your moving budget so you know how much you need to borrow.
- Check your credit report and score to get an idea of which loans you might qualify for.
- Compare interest rates, fees, loan limits and repayment terms for different personal loan lenders.
- Estimate the monthly repayment amount for different personal loan options.
- Plan your post-move budget to accommodate the loan payments.
Moving.com. "Moving Cost Calculator for Moving Estimates," Accessed Oct. 4, 2019.
OneMain Financial. "Personal Loans," Accessed Oct. 4, 2019.
Wells Fargo. "Secured Loans and Lines of Credit," Accessed Oct. 4, 2019.
SoFi. "Personal Loans," Accessed Oct. 4, 2019.
The Federal Reserve. "July 2019 Consumer Credit - G.19," Accessed Oct. 4, 2019.
LightStream. "Loans for Practically Anything," Accessed Oct. 4, 2019.