Pros & Cons
- Able to fund a loan within two days of application.
- Zero-interest financing for qualified borrowers.
- Soft credit check with pre-qualification.
- Reports payments to only one credit bureau.
- No joint or co-signed loans.
- Borrowers can’t choose or change their payment date.
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Full Review of Ally Home Improvement Loan
To review Ally's home improvement loan, NerdWallet collected more than 40 data points from the lender, interviewed company executives and compared the lender with others that seek the same customer or offer a similar personal loan product. Loan terms and fees may vary by state.
Ally Bank provides home improvement financing through general contractors or vendors that offer home remodel or repair services. The online bank began offering this financing via its lending arm, Ally Lending, in May 2020 in all 50 states, says Greg Cicatelli, who oversees Ally’s home improvement sales.
Unlike other home improvement loans, funds from an Ally loan don't go directly to a borrower. Rather, the bank partners with service providers who receive the funds to complete your home improvement project. You then repay the loan to Ally in monthly installments.
Ally home improvement financing can be less flexible than some personal loans — you can’t change your payment due date, for example. But repayment terms are long, and some borrowers may qualify for zero-interest financing.
How Ally’s home improvement loan works
Say you want a new swimming pool, and the contractor you’re using to install the pool offers financing through Ally Bank. Once you’ve settled on a price, the contractor will pull up an Ally application on their tablet, and you'll enter information like your income and employment to get pre-qualified for offers.
If you accept a loan offer, Ally sends the funds to the contractor, and you send monthly repayments to Ally. You can manage the loan through Ally’s website.
» MORE: Swimming pool financing
Ally home improvement loan pros and cons
Low rates: With annual percentage rates between 0% and 26.99%, Ally home improvement loan rates can be lower than some personal loans, which can have rates up to 36%. Greensky, which provides a similar type of financing, has comparable rates to Ally.
Fast funding: Once you’re approved, Ally can send the funds to a contractor within 24 to 48 hours.
Soft credit check: When you pre-qualify for Ally financing, the bank does a soft credit check. If you don’t like the offers you get, you can decline the loan without hurting your credit score. If you go ahead with the offer, the bank will do a hard credit pull.
No joint or co-signed loans: You can’t apply for an Ally home improvement loan with another person. Adding someone with better credit or higher income to a personal loan application may improve your chances of qualifying for a loan, or get you a lower rate.
» MORE: Personal loans with a co-signer
Borrowers cannot choose or change their payment date: Ally assigns your payment date, which is set for the life of the loan, the company says. It has hardship plans for things like job losses, but those offerings vary based on your situation.
Reports to only one credit bureau: Ally reports payments toward its home improvement loans to just one of the three major credit bureaus, Experian. This means if you make several years’ worth of on-time payments, a creditor that checks TransUnion or Equifax won’t see your good repayment history.
Ally home improvement loan rates, terms and qualifications
Rates and fees
Interest rates on Ally home improvement financing are fixed, like rates on most personal loans. Here are rate options Ally may offer you:
0% APR financing on loans with two- or three-year terms.
An APR up to 26.99%.
An APR up to 26.99% and a chance to be refunded the interest if you pay the loan off within a certain period.
With the promotion, you pay interest on the loan from the start, but if you pay the loan off within the time you agree to — options range from six months to two years — you're refunded any interest you've paid during that time. If you don't pay the loan off within that period, you'll just keep paying the loan with interest included. That option typically has a higher regular APR than a loan without the promotion would have.
Ally doesn’t charge origination or prepayment fees. The only fee the lender charges is a $35 late fee if the payment is more than three days overdue.
Borrowers can get a loan term between two and 15 years, which is slightly wider than the range on many personal loans. While most personal loans can be repaid over two to seven years, some lenders, like LightStream and Navy Federal, offer longer terms for home improvement loans.
The lender doesn’t disclose much about borrower requirements, but Cicatelli says showing that you have enough income to make your existing debt payments plus this extra loan is important in an application decision.
Ally decides your loan rate similarly to other personal loan lenders; it considers factors like your credit score and history, existing debts, income and employment.
Alternatives to Ally
Ally is one option for financing home improvement costs. Here are a few alternatives to consider before deciding:
Home equity loans and HELOCs: If you have enough equity in your home, you may qualify for a home equity loan or line of credit. These options have low rates and long repayment terms.
Personal loans: Consider a personal loan for a home improvement if you don’t have enough equity to cover the project, or if you don’t want to use your home as collateral for the loan. Pre-qualifying for a personal loan lets you compare rates and payments from multiple lenders without affecting your credit score.
Credit cards: DIY projects are typically the best fit for using credit cards for renovations. If you plan to purchase materials for your remodel from a particular store, a store card could earn you cash back on your purchases.
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