Personal Loans for Moving and Relocation in 2021

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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. You can use the funds from an unsecured loan to pay for anything, including movers and furniture for your new home. You repay this loan in fixed amounts usually over a few years, plus interest.

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

• Lower rates than credit cards. If you have good credit, you may get a lower rate on a personal loan than on a credit card. The estimated rate for borrowers with excellent credit is 13.9%, according to our personal loan calculator.

• Fast funding. If your move is coming up, some online loans fund as quickly as one business day. Submitting a complete application with all the required documents can speed up funding.

• Large loans. Borrowers may access large loan amounts with a personal loan that can help with the move and getting set up in their new place.

• Predictable payments. Personal loans have fixed interest rates, so you’ll make the same monthly payment for the life of your loan. This can help with budgeting for the payments and deciding what loan offer is the right fit.

Cons

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

• Fees. Some lenders charge origination fees that can range from 1% to 10% of the loan amount, though it’s usually based on your qualifications. It’s calculated into 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 or lower FICO) or a lot of existing debt when you apply, a personal loan can be expensive. In this case, you can expect a rate above 20% and possibly even higher than 30%.

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 unions: Federal credit union loans start as low as $500 and have a maximum APR of 18%. Because a member’s history with the credit union is considered on a loan application, those with fair credit (630 to 689 FICO) may qualify more easily than with a loan from a bank or online lender.

Credit cards: Borrowers with excellent credit may qualify for a 0% APR credit card, which charges no interest if you pay off the balance within a promotional period — usually 12 to 18 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.

Sell your stuff: Do you really need that piano? Selling larger items like a couch or pool table puts cash in your pocket and reduces moving costs. List items for sale on Facebook or Craigslist, or hold a moving sale.

» MORE: How to budget for a move

How to get a moving loan

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 getting a personal loan:

1. Decide what 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 your move will cost before you apply.

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

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