Should You Get a Personal Loan for Moving Expenses?
Undeniably, moving costs can add up quickly. Many people find it difficult to afford the total expense of relocating, which includes everything from buying packing materials and transportation to professional movers.
There are, fortunately, ways to minimize the burden on one’s wallet. Personal loans, in particular, can be a helpful financial tool for covering relocation costs. To make the most of a personal loan, you should shop around for the most favorable interest rate and repayment terms applicable to the amount of money you need. Credible, an online marketplace, facilitates quick funding by providing instantaneous quotes for interest rates as low as 4.99% APR upon entering the desired loan amount.
If you’re looking for information on how to get a loan to cover your moving costs, you’ve come to the right place.
What Is a Moving Loan?
A moving loan, also known as a relocation loan, is a type of unsecured personal loan intended to cover the costs associated with relocating. A person can obtain an unsecured loan without the need to pledge any valuables as security. Because of the loan’s unguaranteed status, your eligibility will be based on factors such as your salary, your debts, and your credit score. This loan, like any other personal loan, requires payment in equal monthly installments.
In most cases, a moving loan can be used to cover the cost of things like:
- Utilizing the Services of a Professional Moving Company
- Renting a moving truck
- Spending money on packing supplies
- Including costs for short-term housing and storage
- Purchasing a relocation insurance policy
- Placing down rent and security deposits
- Compensation for individual travel expenses
- Transporting pets
In addition to covering transportation costs, a moving loan can assist with temporary housing costs.
How to Get a Personal Loan for Moving Expenses?
- Seek out lenders. Look for the most suitable personal loans online to identify lenders that provide relocation loans. A site that compares different banks and credit unions could be a great place to begin. While you’re there, check out the lenders’ minimum credit score criteria, fees, and annual percentage rate (APR) ranges to get a feel for what they can offer you. Personal loans for relocation may also be available from your regional bank or credit union.
- Consult a number of financial institutions for preapproval. When you’ve narrowed down your list of potential lenders, it’s time to prequalify with each of them (if available). Here you can see the possible rates and terms that might be offered to you should your application be approved. If you want to avoid any potential damage to your credit score, ensure the lender performs only a mild credit check.
- Determine how much you will need to borrow. Consider how much money you’ll need for a loan based on your anticipated costs associated with moving or relocating. Loan minimums can vary across various lenders. Another factor that could reduce your loan amount is state regulation of the smallest sum you can obtain.
- Submit an application for a moving loan. Select a lender who can meet your specific needs, then proceed with the application procedure. Make sure you have your income, date of birth, as well as Social Security number ready to give to the lender. When applying for a loan, you may need to show proof of income to the lender. This could be in the form of W-2 forms, pay stubs, or bank statements.
- Await a loan decision from the lender. After submitting an application, you must now wait for the lender’s decision. Lenders’ approval times can vary widely, from mere seconds at certain institutions to many days at others. Request an explanation from the lender if they turn down your loan application. Possible ways to increase your chances of approval include applying with a co-borrower or co-signer, seeking a smaller amount, working to raise your credit score, and checking your credit report for inaccuracies.
- Conclude the loan agreement then receive the money. When your loan application is accepted, the lending institution will mail you a loan agreement. Your money will probably be deposited into your account directly after you sign the agreement, without any more action on your part. Funding times range from one day to a week or more depending on the lender.
- Pay back the money you borrowed. Complete the loan repayment as agreed upon. If you are late with payments or stop making them altogether, it will negatively affect your credit score. One approach to make sure you never forget payment is to set up automatic payments.
Getting a Personal Loan for Moving Expenses: Pros and Cons
- Flexibility – Relocation loans are similar to personal loans in that they can be used for whatever purpose the borrower sees fit, including paying for any and all moving costs.
- Speed – Loan approval and funding from an internet lender can happen quickly. That’s a good option to have if you need to relocate quickly but don’t have a lot of money saved up.
- 0 Collateral – You can get a moving loan without pledging any assets, which is a big bonus if you don’t want to get a secured loan or don’t have any.
- Low-interest rates for those who qualify – Interest rates for a relocation loan may be comparable to those of other unsecured personal loans. If you have good credit, you have a better chance of qualifying for a reduced interest rate.
- Fees and interest – Any loan will need you to pay interest, and if your credit isn’t perfect, that interest could add up quickly. Possible additional fees include an origination charge from the lender as well as a prepayment penalty.
- Payouts that keep coming – Think about how a relocation loan could affect your budget. Depending on the terms of your loan, you can be making payments on your moving costs for several months or even years after your relocation is complete. Calculating how a loan will affect your monthly expenses might help you decide if getting one is the best option.
- Risk of credit – An individual’s credit score can take a hit if there’s any indication that they might be unable to make their loan payments when they’re due. The single largest contributor to your FICO credit score is your payment history, making it crucial to avoid late or missed payments at all costs.
What to Consider Before Getting a Personal Loan for Moving Expenses?
There are a few measures you should consider before applying for a loan, even though a personal loan may be an excellent method to pay for relocation expenses.
- Request a moving package – Talking to your future employer is the best course of action if you already have a job lined up. Request a relocation package to assist you in adjusting to your new location. Your employer will find a method to assist you if you are in demand and they are eager to have you on board.
- Use savings to pay for your move – You can utilize a portion of your savings—or emergency fund if you have one—to pay for the moving expenses. Since you won’t be paying interest, using this may be preferable to taking out a personal loan.
- Request help from close friends or relatives – Ask your friends and family who already live there for assistance if you have any. Even if they are unable to give you a loan for your relocation, they can still assist you to cut your moving expenses.
Is Getting a Personal Loan for Moving Expenses a Good Idea?
The suitability of a moving loan to your situation, the nature of your move, and the amount you estimate it will cost all go into this decision. The price tag is a major consideration because it can range widely.
It’s probably not a good idea to take out a personal loan for a few hundred bucks in order to cover the costs of a cross-town relocation. For a more substantial relocation, such as crossing the country for a larger house, a moving loan may be in order.
When you have to pack and move suddenly, you may not have sufficient money to meet all of your costs. A loan could be necessary to help you close the deficit.
When Does Getting a Personal Loan for Moving Expenses Make Sense?
Whether or not a moving loan makes sense for your specific circumstances will rely on the interest rate you are able to secure and your ability to make timely loan payments. While there are many instances where taking out a loan is warranted, if doing so will put extra stress on your finances, you should probably go elsewhere. It will be more difficult to get authorized for future loans if you have a history of paying past due amounts.
Alternatives to Moving Loans
A personal loan isn’t the only option for paying for a relocation; there are others. Here are some possible applications:
- Make use of a credit card that doesn’t charge interest.
- Get a borrow from someone you know
- Make use of your company’s relocation assistance programs or reimbursement programs
- Cut back on relocation costs and utilize the money you save to cover them.
You should also think about where you can get the money to cover the cost of the move. Selling items you were going to donate or discard will help you declutter and make room for the move. Asking for price reductions is another money-saving strategy.
It’s both thrilling and nerve-wracking to relocate your life to take a new job. A personal loan could be a useful financial tool for covering relocation expenses, but they do not come without their share of costs. If you absolutely need to borrow money, be sure you’ve looked into all of your other options before applying for a personal loan and that you’re only paying as little as possible in interest.