Whether you decide it’s time for a change or have no choice and need to relocate, the costs of moving can be steep. Additionally, if it’s not something you were planning or saving for, you may also need extra cash to pay for movers, shipping costs, packing supplies and other related expenses. That’s why many people turn to relocation loans.
Depending on how far you’re going and how much stuff you’re taking along, costs can range from a few hundred dollars to a few thousand. So whether you’ve just started planning or you’re packed and almost ready to go, here’s what you need to know.
What Is a Moving Loan?
A moving or relocation loan is just a personal loan to pay for a move, says Michael Sullivan, personal financial consultant with Take Charge America, a nonprofit credit counseling and debt management agency. “There are no special programs for borrowing for a move, although some lenders may offer what they call a moving loan,” he says.
Getting a personal loan is relatively easy, and there are many options available online and at local banks and credit unions. Your credit history and ability to repay the loan will determine your eligibility and interest rate.
Pros of Relocation Loans
- You can get money quickly. Many online lenders have a quick application and approval process, with some able to transfer funds to you in a day or two – or possibly same day.
- You have options. Personal loans for moving are available in a wide range of terms from two years and up, and start as low as $1,000. Shop around to find the ideal monthly payment and term length that your budget can handle.
- You can have less-than-perfect credit. Better credit will definitely help you score a more favorable interest rate, but you can still find a few lenders willing to provide you with a loan if your credit isn’t so hot.
Cons of Relocation Loans
- It might be expensive. “Given interest rate hikes over the last 12 months, APRs are much higher now than just a few years back,” says Shane Cummings, a certified financial planner and a wealth advisor at Halbert Hargrove, a financial services firm based in Denver.
- It can take time to recoup the expense. If you’re moving for a better job opportunity or lower cost of living, you won’t feel the relief until your loan is paid back. “If the pay raise is less than the monthly payment on the loan, the consumer may be worse off for some time,” says Sullivan.
- Other options may cost less. “If the cost is modest and can be paid off in a few months, it might be easiest to put it on a credit card,” says Sullivan. In fact, Cummings points out that if you can acquire a new credit card with a promotional 0% annual percentage rate, you might be able to avoid interest altogether. “Some card offers may be for 18 to 24 months, and if all payments are made prior to the expiration of the teaser rate, you won’t pay interest on the principal,” he says.
How to Choose a Moving Loan
If you decide a loan is your best option, the goal is to keep the cost of borrowing as low as possible.
- Start with a credit check. “If your credit score is below 650, you are likely to pay more for a loan to move than if it was 720,” says Sullivan. And since moving, changing jobs, changing banks and taking out loans are all likely to make you a less desirable borrower, it is crucial to consider credit issues before committing to a major move, he adds.
- Estimate your costs. Call moving companies or truck rental firms for a quote, and price out any other supplies so you have a good idea of how much you need to borrow.
- Get quotes. Sullivan says to look most closely at the interest rate and the length of the loan. “A long-term loan carries smaller payments but costs more in total, so consumers should try to find the lowest interest rate and borrow for the shortest time for which they can handle the payments,” he says.
The 6 Best Relocation Loans
Discover personal loans offer fixed rates starting from 7.99% and no origination fees. If you have great credit, it may be one of the cheapest options to cover the cost of your move. However, the APR can go up to 24.99% if you’re less creditworthy.
Loans start at $2,500 with terms that range from three to seven years.
If you need to get out of town fast, Rocket Loans offers same-day funding if your application process goes smoothly. You can start by getting prequalified so you’ll have a reasonable idea if you’re eligible. On the downside, you’ll pay an origination fee of up to 9%.
Interest rates range from 9.116% with autopay discount to 29.99%, with terms from three to five years.
If you aren’t moving too far or don’t have a lot of bulky furniture, you may not have a huge moving expense. Upstart moving loans start at $1,000, so you won’t have to take out more than you need.
APR ranges vary by state, and there is an origination fee, but funding is fast.
Best for Unemployment Protection: SoFi
Moving to a new town will likely mean new work, too. If something should happen and you lose your job, SoFi has an unemployment assistance program for its loan borrowers. Your account needs to be opened for at least nine months and in good standing to qualify.
Along with that peace of mind, SoFi also offers fast funding. Just note that the minimum you can borrow is $5,000, and you might pay an origination fee of up to 6%.
Best for Less-Than-Great Credit: Upgrade
You might feel that you’re in a bind if you need money to move but your credit is bad. Upgrade offers a secured personal loan option that may help you qualify for funding. You’ll have to put up a fully owned car as collateral, however, which may not work for everyone.
Loan terms range from two to seven years, with minimum amounts starting at $1,000.
If you’re relocating with a partner or just need the help of a co-borrower to get approved for a personal loan, LendingClub has a joint personal loan option. Having a second person on your loan may also help you qualify for a lower interest rate, which starts at 9.57% and goes up to 35.99%.
Loan terms are two to five years.
Keep Relocation Costs in Check
Moving is often required for someone needing the right opportunity, so it’s not always a choice – but do your best to minimize costs, says Sullivan.
If possible, the best scenario is to see if your employer will cover some of the relocation costs. The next best option is to use your cash reserves. But if borrowing is necessary, then exploring personal loans for moving can help you start your new life.
