Uprooting your life and relocating somewhere new is an exciting but also incredibly stressful time. In addition to the emotional impact that leaving the familiar behind for the unknown brings, you also have to worry about the logistics of finding a new home, moving your things, and setting up your new life. In some cases, this may put you in a bit of a budget crunch, and even if you can afford it, you may not have the cash on hand when you need it. Moving loans can help you cover the gap and ease your transition into your new life.
What is a Moving Loan?
A moving or relocation loan is a personal loan that you can apply for to help you cover expenses related to your next big move. These loans are usually short-term and have lower interest rates than alternative financing options like credit cards. They’re also easier to apply for and are disbursed much quicker than traditional loans.
Those are my top 3 Best Moving Loans
- Admin. fee: 0.99% - 5.99%
- Annual income of $80,000
- Min credit score of 640
- Failed payment fee: $15
- Day of Grace: 3 days
- Grace period fee: $25
- Administrative fee: 0% - 8%
- Min credit score of 620
- Quick funding - 1 Day
- Grace period fee: 5% Max $15
- No prepayment penalty
- No fees
- Low interest rate
- Fixed Rates
- Min credit score of 680
- Unemployment protection
- SoFi member benefits
Should You Use a Moving Loan?
As with most other forms of debt, there are some cases where you should use moving loans, as well as some situations where it may not be ideal. It’s true that moving isn’t cheap—the average cost for relocation in the US is $692, though it’s not unusual to spend as much as $1,400 during a move. However, some of this may be offset by savings, relocation assistance provided by employers, and other income.
One situation in which you may benefit from getting a residency relocation loan is if you have a budget planned but are short in cash on hand now. A loan could help you cover the gap, complete your move, and get set up without stressing about missing rent payments, deposits, or buying furniture you’ll need. Additionally, if you’re sure you can repay the loan quickly, adding a little padding to your budget can be beneficial in adjusting more quickly.
However, if you have other outstanding debts, or are struggling to meet your current budget, you may be better served looking for alternative ways to finance your move.
Advantages and Disadvantages
Before applying for a moving expense loan, you should consider both the good and the bad:
- With minimum amounts as low as $1,000, you can get exactly what you need.
- They give you lower interest rates than credit cards, minimizing your debt.
- You don’t need to put up any of your assets as collateral with a personal loan.
- You can set the repayment term that works best for you.
- Fees tend to be lower and friendlier than traditional loans.
- You’re adding debt to your budget, which may have a long-term impact.
- Your credit score may bar you from getting the best rates possible
- Some lenders still have fees that can increase your debt.
How to Qualify for A Moving Loan?
While you can still get a moving loan for bad credit, there are some steps you should consider to make sure you get the best possible rates and terms.
- Make sure your credit score is a minimum of 630. While lenders have varying standards and requirements for eligibility, many of them set the bar at 630. This amounts to “good” credit, and the better your credit, the lower your interest rates.
- Keep a low debt-to-income ratio. Most lenders are concerned at adding debt to a borrower who is already spending a large chunk of their monthly salary on loans. Aim to keep your debt-to-income at 40% at the highest.
- Have a steady income. Most importantly, lenders want to see that you can make your monthly payments consistently and on time. Having a steady source of income is a major point toward getting approved.
How to Get the Best Rate
To get the best possible rates on your loans for moving expenses, there are few quick steps you can take. The first is to check your credit score and work on improving it, either on your own or with a credit reporting tool. Better scores mean higher rates off the bat, and also let you borrow larger sums if necessary.
Next, you should plan your budget and make sure you can set aside funds every month to repay your loan. This will help you start paying off any debts you have, and let you know if you can afford a loan. Finally, work on minimizing the amount of existing debt you already have. Even small monthly payments go a long way and reducing things like credit card expenses can also lower your debt-to-income ratio, as well as improving your credit score by building a positive track record of payments.
Moving Loan Alternatives
If you decide that a personal loan may not be the best choice for you, there are still ways you can reduce the financial strain of relocating:
- Family and friends may be willing to help you, either with monetary assistance or even with moving help, which lowers your overall costs.
- Credit unions also offer you smaller loans, and though they take longer to approve you, can still offer as little as $500 with APRs that max out at 18%
- Credit cards are great if you’re not using them for major expenses. Paying for boxes, supplies, and even some furniture with a card can reduce your current strain and let you pay off your new things at your own pace.
- Selling your stuff is both useful and cathartic. You can make some money to help the move, and you reduce the number of things you need to haul around the country.
Relocation loans are a great way to help you manage the expenses and stress of moving to a new city and starting over. By helping you plan your budget with less strain and giving you some breathing room, loans for relocation expenses can make a move easier and smoother. Even if a personal loan isn’t the best alternative for you, you can still find great solutions that don’t put you in debt, and the let you avoid the stress that comes with relocation.