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What is a moving or relocation loan?

A moving loan is an unsecured personal loan used to pay for moving expenses, such as movers and new furniture. A personal loan used for relocation comes in a lump sum that you repay, plus interest, in fixed amounts usually over a few years.

These loans are available from online lenders, credit unions and many banks. Online loans typically fund faster, but you may get a better rate from a local bank or credit union.

If you have fair or bad credit (689 credit score or lower), credit union loans may be an especially good option, since they tend to offer lower rates and more flexible terms for borrowers with low credit scores. Federal credit union loans can start under $1,000 and have a maximum APR of 18%.

» MORE: Online vs. in-person loans: How to choose

How much does it cost to move?

The cost to move depends on several factors, such as how far you’re moving and where to, how much you’re bringing and how you’ll get them there.

On average, a move across town costs about $1,689, while a cross-country relocation costs about $4,567, according to HomeAdvisor.

Your moving expenses could include:

• Boxes and supplies.

• Professional packers or moving crew.

• Moving truck or trailer.

• Shipping containers.

• Airfare.

• Gas.

• New furniture.

• Cleaning service.

• Security deposit and first and last month’s rent.

Make sure to budget for the move before applying for a moving loan, since you won’t be able to request more money once the loan is funded.

» MORE: How much does it cost to move?

Pros and cons of moving loans

Taking a personal loan for moving expenses is just one financing option. Here are the main pros and cons of getting one for a big move.

Pros of moving loans

• Lower rates than some credit cards. If you have good credit, you may get a lower rate on a personal loan than on a credit card. Personal loan rates range from about 6% to 36%.

• Fast funding. If the move is soon, some online loans fund as quickly as the same or next business day after you’re approved. Submitting a complete application with all the required documents can speed up funding.

• Predictable payments. Personal loans have fixed interest rates, meaning the monthly payment will be the same for the life of the loan. This can help you budget for the payments. Use our personal loan calculator to estimate monthly payments based on loan amount, interest rate and loan term.

Cons of moving loans

• Long-term debt. You’ll likely be paying for the move long after settling into your new home, since repayment terms on personal loans can extend up to seven years.

• Fees. Some lenders charge origination fees that can range from 1% to 10% of the loan amount. This fee is included in the annual percentage rate and may be subtracted from the loan proceeds. For example, a $5,000 loan with a 5% origination fee ($250) would net you $4,750.

• High rates for bad credit. If you have bad credit (629 credit score or lower) or a lot of existing debt, a personal loan can be expensive. In this case, the interest rate may be above 20% and possibly even higher than 30%.

Should I get a personal loan for moving?

A personal loan is one of a few financing options for your move. Because there aren’t many restrictions on how to use a personal loan, you can spend the funds on moving expenses and things like new home furnishings.

A personal loan may be the right choice if you don’t have savings or cheaper financing options, like a 0% interest credit card or a relocation package from a new employer.

How to get a loan for moving

Borrowers with strong credit and a low debt-to-income ratio have the best chances of qualifying for a low rate on a moving loan, although requirements vary by lender. Building your credit and improving your debt-to-income ratio are good ways to boost your chances of qualifying for a moving loan.

Here are the steps to apply for a personal loan.

1. Decide how much you need: Personal loans come in a lump sum, unlike a credit card or line of credit, and it’s not always easy to go back and borrow more. Make sure to have a strong idea of how much the move will cost before you apply.

2. Pre-qualify: Pre-qualify with a lender to see your estimated loan amount, APR and monthly payments. Pre-qualifying doesn’t affect your credit score, so you can compare offers from a few lenders before committing to a loan.

3. Prepare documents and apply: Once you’ve decided which offer to accept, gather documents like identification, Social Security number, W-2s and pay stubs. Having all of these documents ready can get you through the application more quickly and may help the lender approve the application faster.

4. Make a repayment plan: Be sure you have a plan to make your payments on time, which can help you build credit and avoid late fees. Most lenders don’t penalize you for making extra payments or paying the loan off early. If you’re able to pay extra, you’ll save on interest in the long run.

» MORE: Pre-qualify with NerdWallet to see offers from lenders that partner with us

Alternatives to moving loans

Savings are the cheapest way to pay for a move, so if you have an emergency fund or time to budget beforehand, you could avoid borrowing as much or getting a loan altogether.

If not, compare these alternatives with a personal loan to find the financing option that’s best for your plans:

Relocation package: If you’re relocating for a new job, ask your new company about paying for some or all of your moving expenses. If you didn’t discuss it during the negotiation process, it could be worthwhile to ask before going into debt for the move.

Credit cards: Borrowers with good or excellent credit may qualify for a 0% APR credit card, which charges no interest if the balance is paid off within the promotional period — usually 15 to 21 months.

Family and friends: Getting a loan from family or friends can be a low- or no-interest way to borrow money that won’t affect your credit score. Tread lightly with this option if borrowing money would mean risking your relationship with the lender.