6 Deck Loans: Finance Your Deck or Patio

» MORE: Compare top lenders for home improvement projects

3 ways to finance deck additions

How you finance your deck depends on factors like how much home equity you have, your credit and income, and the cost of your project. Knowing how much your deck will cost can help inform which option to choose.

1. Personal loans

An unsecured personal loan doesn’t require you to pledge your home as collateral, so the interest rate may be higher than with a home equity loan or line of credit.

When they’re best

Personal loans are best if you don’t have enough home equity to cover the project cost or you don’t want to use your home as collateral for the new deck.

A new or renovated deck may also be less expensive than other home improvements, which may mean it's not worth the closing costs and the effort of underwriting for a home equity option.

Things to consider about personal loans

• Fast funding. Many online lenders can fund a loan within a day or two, while banks can take a few days to a week. In both cases, you’ll likely get your funds faster with a personal loan than with home equity financing.

• Unsecured. Getting an unsecured loan means that if you fail to repay, the lender can’t take your house or car. They may, however, garnish your wages or take you to court. If you pay the loan on time, your credit will benefit; if you miss payments, your credit score will likely drop.

• High credit and debt standards. Because lenders assess only your finances and creditworthiness, many have high credit standards and require a low debt-to-income ratio. You can apply for a joint or co-signed personal loan if you think you won’t qualify for a low rate on your own.

How to get started

Your first step to getting a personal loan should be to compare options. Pre-qualify with multiple online lenders on NerdWallet to see what rates lenders can offer, then begin the application process.

» MORE: Personal loans for landscaping projects

2. Home equity loans and lines of credit

Home equity loans and lines of credit have lower interest rates than other financing options because they’re secured by your home.

Home equity loans have low fixed rates and let you borrow a specific amount in a lump sum. Your monthly payments — which are also fixed — go toward both interest and principal.

Home equity lines of credit have variable rates, but give you the flexibility of borrowing only what you need and repaying interest only on that amount. HELOCs have two phases: the draw period, when you borrow, and the repayment period.

When they’re best

Home equity options are best if you’re comfortable using your home as collateral and you have enough equity to finance the project.

Home equity loans are best if you know how much you’ll need for the project. You typically can't borrow more money from your equity once you’ve gotten a loan.

Home equity lines of credit are best if you think you might incur more expenses along the way. You should be comfortable with some variation in your interest rate with this option.

Things to consider about HELOCs and home equity loans

• Tax benefits. When you use equity to pay for a home improvement, the interest you pay is tax-deductible up to a limit. The tax rules are the same for both HELOCs and home equity loans.

• Secured financing. Home equity options have lower rates than personal loans and credit cards partly because your home is used as collateral.

• Long repayment terms. Both home equity loans and lines of credit often have repayment terms of over a decade, while personal loan repayment terms are shorter.

How to get started

Compare home equity loans and lines of credit to decide which option is best for you. Then, compare lenders to find the one that best suits your project.

3. 0% APR credit cards

Credit cards tend to have higher average APRs than personal loans and home equity options. However, if you can pay off the cost of your project in a year or so, a 0% APR credit card may be the cheapest option.

These cards come with promotional periods — typically 12 to 18 months — when purchases you make don’t accrue interest.

When they’re best

These cards are best when you can qualify — meaning you have strong credit and little existing debt — and when you can pay the balance in full by the end of the promotional period.

Things to consider about credit cards

• High credit standards. Cards with a 0% APR introductory period typically require good or excellent credit to qualify. You may be approved for the card, but you may not be approved for the full amount you plan to spend on the new outdoor area. In that case, you can use the card for supplementary expenses or unexpected costs.

• High rates after the promotional period. If you use a 0% APR credit card to finance a deck or patio and don’t pay off the balance, interest begins to accrue on the card when the promotional period ends. Check the card’s post-promotion APR and evaluate whether you’re comfortable paying that on whatever balance is left over.

• Monthly payments. Cardholders should plan to make monthly payments. If you’re late with your minimum payment, a lender can cancel the promotion, leaving you with the balance and the card’s regular interest rate.

» MORE: Learn more about 0% APR credit cards

How to get started

Compare 0% APR cards to find the one with features and rates that fit your needs. Once you’ve found the one that works best for your plans, get ready to apply.

How to compare personal loans for deck and patio financing

• Qualifications. The interest rate and loan amount you get are based primarily on your credit profile, income and existing debts. Lenders want to know that you can pay your monthly expenses, plus the additional loan payments. Some lenders cater to people with bad credit (629 or lower FICO), while others seek borrowers with good or excellent credit (690 and higher FICO).

• APR. A personal loan’s annual percentage rate is the entire cost of the loan, including interest and any fees. A lower APR means a cheaper loan.