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As any homeowner knows, things tend to break -- and when that happens, a personal loan can help. Here, we'll discuss how much the average home repair costs, how the best personal loans work, and other options for covering the unwelcome expense.
The cost of emergency repairs depends on how large the repair project is. For example, repairs to your heating, ventilation, and cooling (HVAC) system can cost up to $6,000. If you need a new water heater, you can expect to pay over $1,000. And if your home has suffered water damage, you may face a repair bill as high as $25,000.
Personal loans can be an ideal way to fund repairs, especially if you have larger repairs to make to your home. While some lenders specifically market personal loans as renovation loans, you can apply for any personal loan and don't have to restrict yourself to those options alone.
Get the best rates and terms to fit your needs. Here are a few loans we'd like to highlight, including our award winners.
Lender | APR Range | Loan Amount | Min. Credit Score | Next Steps |
---|---|---|---|---|
Rating image, 5.0 out of 5 stars.
5.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Fixed: 8.99%-29.99% APR (with all discounts)
|
$5,000 - $100,000
|
680
|
|
Apply Now for Discover Personal Loan
Powered by Credible
Rating image, 5.0 out of 5 stars.
5.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
7.99% - 24.99%
|
$2,500 - $40,000
|
660
|
Apply Now for Discover Personal Loan
Powered by Credible |
Rating image, 4.0 out of 5 stars.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
7.80% - 35.99%
|
$1,000 - $50,000
|
300
|
A personal loan is money you borrow from a lender and repay with interest, typically in equal monthly installments. Once you've determined how much repairs will cost, you borrow the funds from a lender, and the funds are disbursed in a single, lump-sum payment.
If you're considering a personal loan to make home repairs, it's wise to weigh the pros and cons.
Pros
Cons
Weigh all these factors to decide if getting a personal loan to cover your home repairs is a good idea.
Any time you borrow money, the goal is to land the lowest possible interest rate. Here are some of the factors that go into deciding your rate.
The higher your credit score, the better your chances of landing a low interest rate.
Lenders ask for proof of employment status and how much money you earn. What they're looking for is assurance that you earn enough money to make monthly payments.
Any time you opt for a secured loan, you must put something of value up as collateral -- like a retirement account or vehicle. While you're likely to land a lower interest rate, you risk losing the collateral to foreclosure if you miss payments. Be sure to carefully consider the risk before taking out a secured loan, even if the interest rate is lower than the rate you'd pay on an unsecured loan.
Lenders consider longer-term loans riskier than shorter-term loans because there's more time for things to go wrong with your finances and for you to stop paying on the loan. They may offset the additional risk by charging a higher interest rate. Choose the shortest loan term you can easily afford to repay.
Financing home repairs can be fairly uncomplicated. Here's how it works.
The higher your score, the better the interest rate and repayment terms you will be offered. Before you do anything else, check your credit score and order a copy of your credit report. If it's low, take steps to raise your credit score.
If you're working with a contractor, get a written estimate of repair costs. If you're making repairs yourself, list all the tools and supplies you'll need to complete the project and find the best prices.
Once you know how much money you'll need, it's time to rate shop lenders. Remember that interest rates only tell part of the story. Also look at the APR, which includes interest, fees, and other charges. Be aware that potential lenders may conduct a hard credit inquiry, which will slightly ding your credit score. However, making regular, on-time payments will cause your score to rebound.
Once you've determined which lender offers the lowest APR and best repayment terms, read over the loan agreement and ask for clarification if there's anything you don't understand. Sign the loan agreement, await loan proceeds, and make your first payment approximately one month later.
As you consider the pros and cons of using a personal loan to pay for repairs, you may also want to consider alternative payment methods.
If you have a strong credit score, you could save on interest by applying for a 0% intro APR credit card. These cards have special promotions where you pay no interest for a set period, typically between 12 and 24 months. You'll want to pay off the balance before the promotional period expires to avoid high interest costs.
If you have equity in your home, you can borrow against it to make home repairs. The upside is that home equity loans typically carry a lower interest rate than personal loans. The downside is your home serves as collateral, and if you miss payments, it can be repossessed.
Some homeowners turn to payday loans to cover emergency repairs, but this is a very bad idea because the APR on these loans can be upward of 400%. There's another option for credit union members who need to borrow a small amount for repairs: a payday alternative loan (PAL).
If you have an emergency fund, you can take money out to fix whatever problems crop up. However, it's a smart idea to have a dedicated savings account where you put money each month or each year to cover repair costs that inevitably arise.
There are several options for paying for emergency home repairs, including personal loans, credit cards, home equity loans, payday alternative loans, and your personal emergency fund. You just need to consider which type of financing makes the most sense, given the credit available to you and the amount you need to borrow.
Based on your monthly budget, you can borrow as much as you'd like. However, the more you borrow, the more you'll pay in interest -- and those interest payments may be better used to build an emergency fund to help you tackle future unplanned bills.
Checking your credit score is one of the only ways a lender can determine how well you've managed debt in the past. It not only impacts whether you're approved for a loan, but it also determines how much you'll pay in interest and loan fees.
There's nothing like setting aside a little money each month to build an emergency fund. Experts suggest aiming for an emergency account with enough money to cover three to six months' expenses. You won't get there overnight, but you can build your emergency savings a little at a time.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
*SoFi Personal Loan Disclaimer
Fixed rates from 8.99% APR to 29.99% APR. APR reflects the 0.25% autopay discount and a 0.25% direct deposit discount.
SoFi Platform personal loans are made either by SoFi Bank, N.A. or , Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. SoFi may receive compensation if you take out a loan originated by Cross River Bank. These rate ranges are current as of 3/06/24 and are subject to change without notice.Not all rates and amounts available in all states. See SoFi Personal Loan eligibility details at https://www.sofi.com/eligibility-criteria/#eligibility-personal. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual ratewill be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors.
Loan amounts range from $5,000–$100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 9.99% of your loan amount for Cross River Bank originated loans which will be deducted from any loan proceeds you receive and for SoFi Bank originated loans have an origination fee of 0%-7%, will be deducted from any loan proceeds you receive.
Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.
Impact to credit score: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
*Upstart Loan Disclaimer
The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.