Should You Use A Personal Loan to Pay for a Move?
What is a Personal Loan to pay for a Move
Let’s face it. Moving is expensive and stressful. Let’s talk about how to make it easier financially. Whether you are moving around the corner or across the nation, there is a cost. Even when you think that you have the final bill there are hidden costs that can come up. There are different ways to pay for a move, but you need to use the one that makes sense for your situation. Using personal loans to pay for a move is one option. A personal loan to pay for a move is a type of loan provided to you to help with the cost of moving.
When a Personal Loan to Pay for a Move is Smart
You will find a wide range of beliefs when it comes to borrowing money. On one side of the debate are those that believe borrowing is wrong, while others do not see anything wrong with borrowing under the right circumstances. There are times when borrowing money for a specific purpose is right. Here are some times when it might be necessary to borrow money for moving expenses.
You find a new job that pays more money and you have to move.
Every person wants to earn more at their place of employment. So, when another job comes your way with a higher salary, you are most likely going to take to the job. The problem is that you probably have not been saving for a move so you are going to have to borrow the money to make it all happen. A Personal loan to pay for a move will help you prepare for the unexpected costs related to the move, storage, hotels, trash removal, and even realtor fees or security deposits for a new home.
A tight budget means that there is not any room for unplanned spending.
A personal loan to pay for a move can provide flexibility to do the things that need to be done. Moving loans may have payments that are low and can easily fit into any budget. It can even help you save money by providing the money to move to a smaller home. A personal loan to pay for a move can help with the down payment and any other costs associated with making a move.
If you are Paying down other debts.
The last thing any person wants to do is accumulate more debt. When it is time for you to take out a personal loan to pay for a move keep in mind that your other debt may cause problems when it comes time to pay it all back. Long before applying for a personal loan to move, pay down current debt as much as you can. Then try to lower your housing payments as much as you can.
A personal loan makes sense only if you have a payment plan.
Before taking out personal loans to pay for a move, you will want to have a plan ready to implement to pay it all back. You may have to cut moving expenses and avoid eating out for a while but in the end it will all be worth it.
Downsides of A Personal Loan to Pay for a Move
A personal loan to pay for a move may seem like the answer to many obstacles that stand in your way when moving to a new area. With every loan there are things that will seem unpleasant. Here are some downsides of having a personal loan to pay for a move.
High interest rates
Interest rates are on the rise. Each lender will have a different method of figuring out your interest rate but there are some things that remain the same. You can expect to pay between 5 percent and 30 percent interest rate on your personal loan. Your rate is calculated by every lender the same way. They will look into your credit history and will look at your current financial obligations before lending you the money. Calculating your ability to pay and what interest rate to offer you is also part of their methods. They will also look at the risk of loaning you the money. The lender will want to make sure that you can pay them back once the loan has been issued.
Loan fees can either be high or low depending on which lender you use. However, there are some lenders that offer no fees for the personal moving loans. You will want to make sure that the amount of the loan is high enough to cover both the move and the fees charged by the lender. The last thing you will want to have happened is to not have enough money for pay all the expenses associated with the move.
Hard Inquiries and Debt Can Affect Your Credit
When it comes to your credit score the last thing you want to see is a reduction in the score. When you first apply for a personal travel loan you will find that the lender will perform what is called a “soft check” to determine your pre-approval amount. This kind of check to your credit will not affect your score. But it is necessary to determine how much money the lending company is willing to loan you.
The only type of credit check that can affect your credit score is called a “hard hit.” This is where the lender really takes a look into your credit history to finalize the loan rate, eligibility, and even the loan amount. This kind of check is done once you have decided to move forward with the loan. It is a check that will affect your credit score. The more “hard hits” that you have on your credit report the more it will affect your score. These kinds of checks fall off of your credit history in a few years. You usually have to give the lender permission to perform this kind of check because of the impact it has on the score.
Other Factors to Consider
There are some other factors that the lender will take into account when you apply for a personal loan.
- They will look at the number of recently opened accounts. If you have several new accounts in a short amount of time, the lender will less likely grant you the loan because you are now considered a higher risk to issue a personal loan.
- They will also take into account the number of “hard checks” on your credit report. This gives a picture of how many times you have requested for a line of credit to be issued.
- The lender will also look at the length of time you have had certain lines of credit. The longer you have been with certain accounts can only help your credit score. The thing that lenders do not want to see on a report is a bunch of new accounts that have been opened and then closed.
You usually have a certain amount of inquiries that can be performed on your credit report before your score starts to decline. You can usually expect that for every check on your credit a decrease of up to five points on your score. A credit check usually has a greater effect on your score than many of the other factors. It is important to minimize the number of checks to your score especially if you are looking for a personal loan to move in the near future. This will ensure that you get a low interest rate and the maximum amount of money for your move.
Other Problems with Short Term Lending
There are always positive and negatives when it comes to borrowing money through a personal loan for bad credit or otherwise. Debt can get out of hand rather quickly when your budget is slim and there is just not enough to go around. Here are some of the other problems of a personal loan that many people really do not consider.
- The issue of higher interest rates and repayment schedules. You will find that a personal loan interest rate is higher than a normal loan rate and lower than a revolving credit rate. When you begin to pay the personal loan back you will find that there is not a lot of money being applied to the principle at first. This is down so the company can earn the most money off the loan up front in case something happens during repayment and they cannot get the loan money back. It is always a good idea to pay a little more on the principle during these first few months. It will allow you to save on the interest when the loan is finally repaid.
- The time to repay this kind of loan is usually shorter than a traditional loan. You will have three to five years to settle the debt. This type of schedule allows you to pay the loans off quicker than a traditional loan.
- You will also find that a lower credit score means there are a limited amount of personal installment loans that lenders will want to loan you and the loan may cost more. It is best to keep this to a minimum so when it comes time to apply for a personal loan to move, there will be no surprises.
Money Tips for Saving on Your Move
Moving costs money and a lot of it. There are somethings that you can do to save on moving cost.
- Pack your own belongs. Some companies will come and pack up your home as a service to you. However, this service usually has a heavy price tag associated with it.
- Thin out your belongings. There is no need to move things you know that you are not going to need at your new home. This will save you money on boxes and space on the truck by not having to move these items.
- Get free boxes. When you are at a store ask the manager if there are any boxes that you can have for free. You will find that there are usually some around they are willing to provide you with.
- Use your towels and blankets for packing material. This will save you money from having to buy paper and bubble wrap to use on your breakables. Just make sure to label the boxes accordingly so you can find your towels and blankets after you arrive at your new home.
Budget Ideas for your Move
Everyone wants to save money and limit their expenses. When making a move there are some things that you can do to keep the cost down.
- Donate unwanted items to charity. In some cases, you will be able to deduct these things on your tax return.
- Develop a budget for your move and stick to it. A budget will be your guide as to how much you can spend in certain areas. It will cause you to get creative when the money starts to get tight.
- Move during the winter months. Moving companies and truck companies will lower their prices in the offseason. It is still a good idea to shop around before hiring the right moving company.
- Ask your friends for help. Good friends are hard to find, but when you do they become a real part of your life. Your friends and family will save you a lot of money on the labor side. They will also be handy if you decided to drive the truck yourself, load, and unload it.
There are so many factors to consider when moving. You will have to make some hard decisions regarding certain things that you normally would not have to except for the move. Funding the move does not have to be one of those stress factors. A personal loan to pay for a move may be the right choice for you. Just consider all your options and factors before making the right choice.