» MORE: Compare top lenders for home improvement projects

What is deck financing?

Deck financing is money borrowed from a lender that you use to pay for a new deck. You then repay the loan amount with interest over time.

Cash is an interest-free way to pay for a deck, but financing options include personal loans, home equity loans or lines of credit, credit cards or contractor financing.

A personal loan is among your fastest options — many lenders can fund a loan within a day or two. Personal loan amounts are $1,000 to $100,000, and annual percentage rates range from 6% to 36%. Personal loans are repaid in fixed monthly installments, typically over two to seven years.

A $7,000 personal loan with a 10% APR repaid over two years would require monthly payments of $323. You’d repay a total of $7,752, including interest.

» MORE: Calculate monthly home improvement loan payments

4 deck financing options

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. Here are four financing options to consider.

An unsecured personal loan doesn’t require pledging your home as collateral, so the interest rate may be higher than with a home equity loan or line of credit. Online lenders offer personal loans, as do some banks and credit unions.

When they’re best: Personal loans are best for financing your deck if you don’t have enough home equity or want to use your home as collateral. They're also best when you need funds quickly.

» MORE: Personal loans for landscaping projects

Things to consider about personal loans

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

• Unsecured. Getting an unsecured loan means if you fail to repay, the lender can’t take your house or car. On-time payments will build your credit, while missed payments will cause it to 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.

» MORE: Personal loans with a co-signer

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

You get a home equity loan in a lump sum and repay it in fixed monthly installments, similar to a personal loan.

Home equity lines of credit give you the flexibility of borrowing as you need and repaying only the interest during the initial draw period. The repayment period can be 20 years, but rates are variable, meaning the monthly payment may fluctuate.

When they’re best: Equity financing works best if you’re comfortable using your home as collateral and have enough equity to pay for the project.

Home equity loans are best if you have a firm cost estimate for the new deck or patio. You typically can't borrow more money from your equity once you’ve gotten a loan.

Home equity lines of credit are best if your project has an uncertain timeline or you’re concerned about surprise expenses.

Things to consider about HELOCs and home equity loans

• Tax benefits. When you use equity to pay for a home improvement, the interest is tax-deductible.

• 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 can have repayment terms of over a decade, while personal loan repayment terms are shorter.

» MORE: Home equity loans vs. lines of credit

On average, credit cards have higher APRs than personal loans and home equity options. But if you qualify, a 0% APR credit card may be your cheapest option.

When they’re best: These cards are best when you qualify — meaning you have strong credit and little existing debt — and you can pay the full balance by the end of the promotional period, which is usually 15 to 21 months.

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 not 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 when the promotional period ends. Check the card’s post-promotion APR and decide whether you'd be comfortable paying it.

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

» MORE: Compare 0% APR cards

Some contractors offer financing through a third-party lender, like GreenSky. These are often unsecured loans that a contractor offers once you agree on a cost estimate.

When they’re best: This type of loan is best when it’s the least expensive option. Because the financing is offered through the contractor, they may be able to start on the deck or patio quickly if you use it.

Things to consider about contractor financing

• Not all contractors offer it. Don’t expect every contractor that gives you a quote to provide financing.

• It’s usually an unsecured loan. There’s usually no collateral for this type of loan, but missed payments will hurt your credit.

• Financing may be offered on the spot. Once you agree on an estimate, the contractor may pull up an application and ask you to submit it right away. Even if it seems like a good offer, take time to review the rate and terms and compare it with other financing options.

» MORE: Learn about financing home improvement projects with a contractor

How to compare personal loans for deck and patio financing

• Qualifications. The loan’s interest rate and the amount you receive are based primarily on your credit, income and existing debts. Lenders want to know that you can cover your regular monthly expenses, plus the additional loan payments. Some lenders cater to people with bad credit (a 629 or lower score), while others seek borrowers with good or excellent credit (690 and higher). Review lender requirements to determine where you may qualify.

• APR. A personal loan’s annual percentage rate is the entire cost of the loan, including interest and any fees. The loan with the lowest APR is the least expensive one.

• Loan terms. Loans with longer terms often cost more in total interest, though monthly payments will be lower. Choose the shortest repayment term with payments you can still afford to minimize interest costs.

• Special features. Some lenders offer features like pre-qualification, which lets you see your rate with a soft credit pull before formally applying. Others may give a rate discount for setting up automatic payments.

How to get a deck loan

Here are the steps to get a deck loan:

1. Get a firm cost estimate. The cost of your new deck or patio can determine the best way to pay for it. Calculate your total cost and identify how much you need to borrow.

2. Pre-qualify. Once you have an estimate, pre-qualify with multiple lenders to see potential loan rates and terms. Pre-qualifying requires only a soft-credit check so it doesn't affect your credit score.

3. Compare lenders. Lenders may offer different rates, funding times and repayment terms. Compare your options and find a loan with monthly payments that fit comfortably in your budget while offering the features you need.

4. Apply. Many lenders have an application process that is completely online. You’ll be asked to provide documents verifying your income like W-2s, pay stubs and bank statements. Lenders can inform you of a credit decision within a day or two of applying.

» MORE: How to get a personal loan

How much does it cost to build a deck or patio?

A new deck costs $4,347 to $12,492 on average, while a new patio can cost $1,968 to $5,866, according to home improvement website Angi.

Factors that affect the cost include materials used to build the deck or patio and the cost of labor if you hire a contractor. Decks on the second floor of the house can cost more than double those on the first floor, according to Angi.