Moving can be an expensive affair, whether it’s for work or you just decided you like a new adventure.
For most people, moving involves roping in the family to help with the heavy lifting. However, there are some moving expenses that you can’t avoid.
These include hiring a moving truck and putting down a security deposit on a new home.
For many, these expenses could mean ending up with absolutely no cash to start a new life. That’s where moving loans come into play. You don’t have to deplete your life savings just because you want to move towns or counties.
What Are Moving Loans?
These are unsecured personal loans that you can get to help cover the expenses that come with moving.
Because moving loans are considered unsecured personal loans, you don’t have to attach them to your assets, such as your car or your new home.
However, an unsecured personal loan comes at a specific interest rate and, depending on your credit rating, with different terms and conditions.
For those who qualify, moving loans represent some of the best and most convenient ways to cover the expenses that come with moving. If you play it right, you might even have money to help you start life in a new place.
Pros and Cons of a Moving or Relocation Loan
For some people, the mere fact that they might have to take out a relocation loan and risk their current credit rating often brings mental strife.
Yes, unless you need it, there are always alternatives to borrowing money. However, when it comes to moving and relocation expenses, in some cases, you may only take out a moving loan.
Thankfully, this doesn’t have to be a painful financial undertaking if you find the right lender. Furthermore, the right moving loan always comes with many advantages compared to other personal loan options.
Here are some pros and cons of moving loans:
Pros:
- Fixed interest rates: One of the best things about moving loans is that they come with a fixed interest rate which means that you know exactly how much you owe when you take it up. Unlike some loans with variable interest rates, you won’t end up owing more than you bargained for should the rates change.
- Fixed monthly payment: Because these loans have a fixed interest rate, you get a fixed monthly payment amount for the loan duration. This allows you to budget for the loan repayment every month or even pay it off faster should you come into some money. Typically, these loans have 12-month loan repayment term periods or even longer.
- Lower interest rates: The kind of loan you can access depends on your credit rating. You could qualify for moving loans with extremely low-interest rates and favorable terms if you have good credit.
- Quick access to money: Of course, this depends on who your lender is, but many lenders will give you the money you need within 24 to 48 hours. This means you could have the money you need for the moving process even before you finish packing.
- Unsecured loans: Because they are typically unsecured, you don’t risk losing any assets since you don’t have to use them as security. The only thing you risk by not paying back these types of loans as required is your credit rating.
Cons:
- Comes with an interest rate: Since this is quite literally a loan that comes with interest, you will spend much more money on your moving and relocation expenses. While the interest might be low for some loans, it’s still an interest charged and an extra expense. This interest or extra expense wouldn’t be necessary if you didn’t need to borrow the money for moving.
- High borrowing minimum: Unfortunately, most moving loans have a high minimum. Sometimes, you will find that the minimum amount of money you can borrow is around $1000.
- You may get unfavorable terms: While it’s difficult to be completely disqualified from taking these kinds of loans, those with bad credit may not get very favorable terms. This typically means that you may see extremely high interest rates, making a move even more expensive in the long run.
- There are hidden fees involved: Borrowers may have to pay extra fees such as origination fees and others in many cases. These fees are often included in the total owed amount or paid upfront, depending on the lender you use.
Tips on How to Apply for Moving Loans
It would be understandable if you had some reservations about applying for a moving loan. This typically arises because many financial institutions put their potential borrowers through a rigorous loan application process. You may find that loan applications take days or even weeks with a ton of paperwork.
Thankfully, applying for moving loans isn’t this complicated. It does, however, call for some preparation. Here are some tips that can help you successfully apply for a moving loan when you need it:
Do Your Research
This is a given. Just as you had to research the new moving destination and house, you must research moving loans. There are several things you need to know, such as:
- Interest rates
- Repayment term
- How quickly will the money be disbursed
- Hidden or extra charges
All this is necessary if you want to get the best possible deals. Different lenders offer different terms. So, compare and contrast them accordingly before you make a choice.
Consider Getting Pre-Qualified
Getting pre-qualified for these loans is one of the best ways to go. Many online platforms allow you to get pre-qualified by up to five different lenders at once.
Find a Lender with the Best Terms
One of the biggest advantages of shopping around for offers before choosing a lender is that you can compare the different terms on offer.
Every lender is different, and even though their offers may differ by what might look like a minuscule difference (like 0.05% in the interest rate), that difference adds up over the loan term.
Take your time to find the best offer possible. You can even send an inquiry and ask for better terms. Some lenders are amenable to that and could decide to change their terms slightly to accommodate you.
That’s why this research needs to be done well beforehand, so you can perform the necessary back-and-forth with different lenders.
Submit the Loan Application
When researching different lenders without applying, you are doing a “soft inquiry.”
In this case, your credit rating doesn’t take that much of a hit.
However, once you put in a loan application, you will have performed a “hard inquiry.”
The problem with hard inquiries is that your credit score will take a big hit whether or not you get loan acceptance, which will show up on your credit history.
That’s why you need to wait until you are sure about the terms and maybe even pre-qualification before you put in an application for the loan.
Once you have put in your loan application, many of the available lenders will quickly process the funds and deposit them into your account. In many cases, within 24 to 48 hours of your application being approved.
Alternatives to Moving Loans
When it comes to apply for personal loans formally, many people get rather anxious.
This is mostly because you are essentially taking someone else’s money with a promise that you will pay them back. If you fail to pay them back in time, your credit score will take a hit and reflect on your credit history.
They will tell other lenders that you are not to be trusted with money. That is enough to make most people scared of applying for these loans.
So, what is the alternative to taking out a personal loan offer for moving purposes and relocation expenses?
- Pay with your credit card: If you have a credit card with a high limit, you can simply put the moving and relocation expenses on the credit card and keep paying your monthly payment as usual.
- Save for the move: If you know you will move well in advance, you can simply start budgeting and saving for it so you don’t have to borrow money when the time comes.
- Borrow from family and friends: If you are lucky enough to have friends and family members who can loan you the money, borrowing from them is often better than going for a personal loan.
You will, however, need to pay them back as promised. The advantage of private loans like this is that your credit score remains intact, and no fee or collateral is generally needed. - Raise the money somehow: The fact that you are moving means that you might need to audit the kind of possessions you have at home. For example, you may find pieces of furniture you don’t want to bring. You can simply sell these pieces off to help raise the money you need for the move.
Moving can be expensive, but it can be easier with the right moving loan. You just need to find the right lender.