A home improvement takes a considerable amount of money to accomplish. Many people don’t have the kind of cash it takes to afford renovating and consider taking on debt to do so. If you’re thinking about financing your home improvements a personal loan may have crossed your mind. Here are a few things to consider before making a decision.
It can be a good idea to use a personal loan for some home improvements. It will all depend on what kind of project you’re planning and the interest rate that you end up securing. Personal loan interest rates are usually unsecured and have a broad range, however the average is between 10% to 32%. If your loan has a lower rate then it can make your project incredibly manageable. However, an interest rate that falls on the higher end will be costly. Most personal loans do have a fixed term of one to seven years and this can be helpful when budgeting. You’ll be able to have a predictable monthly payment which can be a great help.
There are certain situations in which taking out a personal loan makes the most sense. If you’re unable to get financing any other way and your house has a major problem, such as a leaky roof, it makes sense to go ahead with a personal loan. Although you may be paying a high interest rate you’ll be able to avoid any further damage, which could end up costing you much more. If it’s just that you desperately want new floors or cabinets installed and a personal loan is the only possibility, you may want to rethink you’re spending. With a high interest rate, an unnecessary renovation may be regrettable in the long run, as it can cost more than the floors are worth.
When considering taking out a loan it’s important that you take the time to shop around. Start by looking at what is offered to you locally through banks and credit unions. While you’re doing your homework, make sure that you also go online and check out lending sites. Depending on the type of home renovation project there are discounts offered by some lenders. For instance, any home improvement that is aiming to better energy efficiency can result in incentives, such as a 1% discount for any purchase that’s considered a “green” home improvement.
Find the best personal loan for your specific situation only after ruling out every alternative that doesn’t involve taking on any debt.