8 Deck Loans: Finance Your Deck or Patio

» MORE: Compare top lenders for home improvement projects

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).

• 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 in order 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 much does it cost to build a deck or patio?

A new deck costs $4,122 to $11,627 on average, while a new patio can cost $1,938 to $5,627, according to home improvement website HomeAdvisor.

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 HomeAdvisor.

If you finance the project, you’ll pay interest, too. Personal loans have APRs from 6% to 36% and repayment terms of 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 $7,753, including interest.

» MORE: Calculate monthly home improvement loan payments

Here’s what interest rates on personal loans look like, on average:

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. Knowing how much your deck will cost can help you choose the right financing option.

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 for financing your deck if you don’t have enough home equity to pay for the new outdoor area or you don’t 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 others usually 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

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.

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 the money 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 you 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 if 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 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 can have repayment terms of over a decade, while personal loan repayment terms are shorter.

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

3. 0% APR credit cards

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 when 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 on the card 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.

Get started: Compare 0% APR cards to find the one with features and rates that fit your needs.

4. Contractor financing

Some contractors offer financing through a third-party lender, like GreenSky or Ally. These are usually 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 contractor offers this type of financing, it 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, though if you don’t make payments while the contractor is working, it could stop. Missed payments will also 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, similar to “buy now, pay later” loans. Even if it seems like a good offer, take time to review the rate and terms.