The worst part about moving, discounting the physical exertion, is absolutely the expense. Not only do you have to account for gas, rental costs, moving supplies, there’s also, of course, the substantial amount you need to shell out for a down or security payment.
If you find you’re strapped for cash after taking all of these details into account, you’re not alone. In fact, the average cost of simply getting ready to move is $1,648.
If this sounds daunting, you may be considering getting a moving loan. Read on to learn if this is a smart move and what you can expect when doing your shopping!
What is a Moving Loan?
Moving loans are also known as relocation loans. These are personal loans that are specifically used for any expenses that have to do with your relocation. Here are a few ways you can use your moving loan:
- Renting a moving truck
- Purchasing packaging supplies
- Security deposits
- First or last month’s rent
- Hiring professional movers
- Purchasing storage
- Temporary accommodations
- Utility connection fees
- New furniture
As you can see, many of these costs are hidden costs that you may not think of before you begin the process of relocation. Moving loans help mitigate the hit these hidden costs can take on your bank account or credit card.
What are the Advantages of Moving Loans?
There are several advantages to taking out a moving loan, though many of these advantages hinge on whether you have a plan in place to pay them back.
Low Interest
If you have a good credit history, personal loans actually have a lower interest compared to most credit cards. This is important if you’ll need to pay the loan back in installments.
No Collateral
You won’t need to supply collateral, such as your car or home, in order to qualify for an unsecured personal loan. Instead, lenders will look at details such as your income and credit history in order to determine whether they feel confident lending to you.
Pay in Installments
Personal loans typically require you to pay in installments, which is far easier to budget. With a fixed monthly repayment schedule, you’ll be able to better predict and prepare during the stressful time of getting your life back in order after the move.
Flexible Terms
Depending on your budget, loans give you the flexibility of repayment terms that can range from as short as 12 months to as long as 84.
Fast
Moves tend to be hectic at the best of times, but some lenders can approve your loan and get cash in your hands in just a week.
Is a Moving Loan Right for Me?
Even though there are many advantages to moving loans, you’ll need to consider your own financial situation to determine whether you’re saving yourself trouble or just building it down the road.
Here are a few questions to ask yourself:
- Am I moving to a job with a higher or lower salary?
- Will I be able to comfortably afford these extra monthly payments?
- Do I have any other debt that needs to be taken care of?
- Do I have a plan to pay off this loan?
If you feel as if a moving loan will be stretching your budget too thin, you may need to reassess.
One of the largest downsides to personal or moving loans is their high interest rates if you don’t have the best credit. If you’re not able to make the monthly payments, your debt will snowball and your credit score will take a hit. Consider the fact that you may end up paying double what you were originally loaned.
How to Find the Best Moving Loan
Some of the tried and true methods of finding the best lender for your needs are through word of mouth referrals or heading to your current bank. However, online lenders are becoming more prevalent.
While there are an enormous amount of online lenders to choose from, this doesn’t mean they’re equally as reputable.
Here are a few factors to keep in mind:
Interest Rate
These can range from 5% to 36% APR depending on your credit score.
Origination Fee
These range from 1% to 8% of your loan amount.
Prepayment Penalties
Some lenders will charge you an extra fee if you end up paying off your loan early. Remember to read the fine print!
Late-Payment Fees
Conversely, lenders will charge you a fee for any late payments. Be sure you’re aware of how much this is.
Funding Availability
How quickly will you be able to have the money in your bank account?
Discounts
Some lenders will offer a discount if you agree to have the loan deducted directly from your bank account each month, as this gives them greater peace of mind.
Once you have a good idea of the numbers you’re looking for, remember to do your research. Look at online reviews on Google or the Better Business Bureau. Be aware of red flags, such as the lender requesting you to wire money to a specific person, guaranteeing approval.
Beginning Your Stress-Free Move
Whether getting a moving loan is smart all depends on the research you put in and your financial circumstances. You’ll know that getting a loan isn’t the right idea if it’ll be significantly stretching your budget.
However, moving loans are a great option if you have to move right away and don’t want to max out your credit cards in order to pay for all the hidden fees.
Ready to claim your cash now? Applying for your personal loan takes less than five minutes!
