Moving Loans: Finance Your Relocation Expenses

When is it right to get a personal loan for relocation?

Personal loans for moving can be extremely beneficial but determining when it’s necessary can be a challenge. Relocation of any type can be quite expensive, and some common expenses that you may see include:

• Moving costs associated with movers or moving vehicles
• Completing the first and last month’s rent on your new place
• The new home’s security deposit
• Pet deposits

Assuming you don’t have cash on hand to cover these expenses, a personal loan for moving can help with moving expenses.

Related: Reasons to get a personal loan

Who moving loans are best for?

Loans for moving out of state or within state can be helpful for anybody who doesn’t have the reserves of cash on hand that are needed to cover moving expenses. Those with lower credit scores should acknowledge that they may not receive favorable interest rates on these personal loans. A moving assistance loan can help anybody cover necessary moving expenses assuming you don’t have or don’t want to shell out the money out of pocket all at once.

Is a moving loan a good idea?

Moving and relocation loans can be a good idea assuming you are able to secure a favorable interest rate and loan terms and, most importantly, can repay the loan in full and on time. Favorable interest rates on personal loans can range between 8% and 12%. However, if you have poor credit, you may see rates as high as 35%. In either case, you should consider how much the interest charges will add to the cost of your move.

For example, say you need a $3000 loan to pay for your move. If you secure a 10% interest rate, you will end up paying $484.86 in interest over the life of the loan. If, say, your interest rate is 18%, you would pay $904.46 in interest over the life of the loan, bringing the total cost of your move to $3904.46.

Additionally, it’s important to be aware that taking out a loan is taking on debt. If you already have existing debt or can’t afford to make the payments, taking out a new loan can negatively impact your credit.

Pros and cons of moving loans

Alternatives to moving loans

A moving loan can be a great option for funding relocation expenses, but it’s not the only one. A few alternatives to moving loans include:

• Credit cards: Take advantage of a 0% APR credit card, which will not charge interest during the introductory period (typically 12-18 months). This can be an option for borrowers with excellent credit, as you’d qualify for a higher credit limit that can cover your expenses. However, be sure you can still make minimum payments on time and pay off the balance before the introductory period ends; otherwise, you’ll likely be charged a high interest rate.

• Start a side hustle: Earn extra income to fund your moving costs by starting a side hustle. This can be anything you do on the side to make extra cash. This could include contract work related to the industry you work in, i.e., bookkeeping, writing, or consulting, or it might be as simple as dog walking or house sitting.

• Sell your things: As you pack up your old place, put aside clothes, furniture, technology, books, gadgets or other items you can sell. Turn to sites like eBay, Facebook Marketplace, or Craigslist. Or hold a moving sale.

• Relocation package: If you’re moving for a new job, ask your new employer if they offer relocation packages that would pay for some or all your moving expenses.

• Help from family/friends: Instead of hiring a moving company, ask your family or friends to pitch in. They can help you pack and unpack your things or may have a truck or supplies you can borrow instead of renting or purchasing.

• Save: Most of the time, moving isn’t a spur of the moment decision, so you may have some time to set money aside. Saving any extra cash over a period of time in a high-yield savings account may be enough to cover what you need.

• Ask about financing options. Some moving companies may offer payment plans, where you can pay off the cost of the move over the course of a few months. Ask if there are options available but understand that payment plans are usually short term and typically come with less favorable moving rates. Additionally, be sure to read the fine print and understand all the terms and conditions to avoid surprises down the road.

How a moving loan will impact your credit score?

A moving loan will have a positive impact on your credit score over time if you are able to meet all your payments on time and in full. However, falling behind on your payments and sending your loan into delinquency or default can quickly damage your credit score. This can have a negative effect on your odds of being approved for loans in the future and can even damage your credit score by as much as 100 points if you don’t meet your payments.

Moving loans for bad credit

Even if you have poor credit, you can still qualify for a personal loan to use for moving expenses. These funds can still be used for any expenses related to moving, such as renting a truck or moving company, buying packing and shipping materials, storage fees, etc. But depending on how bad your credit is, getting approved may be a little tougher.

The minimum credit score required for most personal/moving loans is 580. If your score is below this, take time to improve your score prior to applying for a loan:

• Make any debt payments on time and in full each month
• Decrease your debt-to-income ratio
• Check your credit report and make sure there are no errors
• Aim for 30% or less credit utilization

If your score is at least 580, compare online lenders to find the best option. Just be aware that:

• You’ll likely have a much higher interest rate
• You may have to have a cosigner on the loan
• You may only qualify for a secure loan, which means you’d have to put up collateral

Pros and cons of moving loans for bad credit

How to qualify for a moving loan?

In order to qualify for a personal loan for moving expenses, you must meet the lenders criteria for factors like:

• Credit score
• Credit history
• Income
• Debt-to-income ratio

Each lender has different sets of criteria, so it’s important to do research and compare your options before applying.

For most lenders, you’ll qualify for the best interest rate and most favorable terms if you have a higher credit score and clean credit history. You also must show reliable income to prove you’ll be able to repay the loan.

If you can, get prequalified for the loan. This triggers a soft credit check, which doesn’t affect your credit score, and can give you an estimate of interest rates and monthly payments to help you compare more personalized options.

How to compare moving loan lenders?

You’ll find many lenders offer personal loans that can cover moving expenses. To find the one that’s right for you, compare:

How to apply for a moving loan?

1. Know your needs. The first step is to estimate your total moving expenses so that you know the loan amount you need to borrow. Factor in any costs for both moving and for the new place if necessary. Personal loans come in a lump sum, so you’ll want to request a loan that covers all of your planned relocation expenses.
2. Shop lenders. Compare interest rates, loan amounts, repayment terms, fees, eligibility requirements, and other features. If you can, prequalify with the lender to get a personalized estimated loan amount, APR, and monthly payments.
3. Choose your best option. After comparing lenders, choose one that has the best rate and term, the loan amount you need, and the lowest fees.
4. Submit the application. Most lenders allow you to complete and apply online. To make this process as quick and smooth as possible, prepare your information and documentation ahead of time. Be ready to provide information like your address, income, and place of work. You may also have to submit documentation like Social Security numbers, W-2s or pay stubs.
5. Finalize the loan agreement. Some lenders approve an application within 24 hours or a few business days. Once approved, you’ll receive a loan agreement to review and sign. After you sign it, you’ll get the funds sent to you.
6. Get your loan funds. This can happen quickly, even as fast as same-day transfer, though it could take up to five business days. Most of the time the funds are directly deposited into your bank account.
7. Repay the loan. Once you receive the funds, you’ll have to start making the monthly payments to pay it off. Have a plan to ensure you can make your payments on time, which not only can build your credit score, but also help you avoid late fees or penalties.