Moving loans, also popular as relocation loans, are personal loans that help fund your moving expenses. It may sound surprising to you why you need to borrow money to finance your moving expenses when you already know that you need to transport your belongings. A lot of people are out there who believe that packing and moving stuff is not a big deal, but when the day comes, they find it harder to do it themselves. Hiring professionals to back you will certainly cost you some money for which you do not make a budget.
Relocation loans are unsecured loans, and therefore, you do not need to back them with collateral. Personal loans are not restricted to their uses in general. You can use them to fund any of your non-commercial expenses. However, when it comes to moving loans, you can use them only to meet moving costs. Under no scenarios can you use them for any unforeseen or other expenses?
You can cover the following costs with the help of relocation costs:
- Moving company charges and fees
- Truck rental fees
- Shipping fees
- Move-out cleaning fees
- Packing supplies
- Hidden fees
- Moving insurances
What are the upsides and downsides of moving loans?
The following tables show the advantages and drawbacks of relocation loans:
Benefits
| Easy to apply | The best part about these loans is that they are extremely convenient to apply. You just need to fill in your details in the application form and submit it. The rest your lender will handle. |
| Low interest rates | You have a chance to get more favourable interest rates if your credit score is decent. These interest rates are much lower than that credit cards charge. |
| Payments easily fit into your budget | The payments will be made over months, so you can easily make your budget around them. This removes the chances of falling into debt. |
| You get funds fast | The amount is not so small as payday loans, so the transfer cannot be done the same day you apply for them. It takes a couple of days, usually a week, to complete the entire process and get funds directly into your bank account. |
Drawbacks
| You will pay upfront fees | Some lenders will charge upfront fees, also called loan origination fees. Even if you apply for these loans with the help of a broker, you cannot escape paying it to your lender. The fees could be up to 5%. |
| A decent credit score is a must to qualify | A few lenders might not be flexible. Having a good credit report before applying for these loans is crucial. Check the criteria of the lender beforehand. |
| Monthly payments can be high | High monthly payments increase the risk of difficulty keeping up. You should carefully evaluate if they could fit into your budget. |
Can you qualify for moving loans with bad credit?
The size of moving loans varies between $3,000 and $7,500. A lender would carefully examine your credibility to ensure that you do not end up with recurring payday loans. A few lenders can be strict with a stellar credit score requirement, while others can be flexible.
However, interest rates will be slightly higher. Choosing the best lender that approves your application with a poor credit score can be difficult, but with the help of research, you might find the best deal. Try to take the help of a broker if your credit rating is poor and you are seeking a lender that lends you money at the most attractive interest rates.
Brokers have a large panel of lenders. They will carefully assess your application and find the lender matching your requirements. You are more likely to get moving loans for bad credit at lower interest rates regardless of your credit rating.
Well, if you have decided to move out, you should try to do up your credit score. Make sure your overall financial situation seems sound, as credit score is not the only factor that decides interest rates to be charged.
What are the alternatives to relocation loans?
Here are the alternatives you can consider:
Relocation package
If you are moving out because of your job, your employers might be willing to fund the moving cost. They might offer you relocation packages that finance your out-of-pocket moving costs. However, bear in mind that the company will fund only a certain amount of money.
It is still suggested that you negotiate with moving companies. Ask them for discounts. Understand the conditions thoroughly if you are looking for a moving package.
Use your credit card
It is not necessary that you will need a larger sum of money when you are moving out. If you are doing so at the behest of your employer, they will not fund the cost if it is not too big. Credit cards can come in handy in this situation.
You do not have to pay interest as you do with personal loans, provided you pay off the balance within the interest-free period in full. However, if you carry the balance, interest will accrue on a per-day basis, and it could be higher than that of personal loans.
Savings
Not to mention, moving cost is not an unexpected expense, so ideally, you should have stashed away enough money to cover it. The nest egg will save a lot of your money on interest. If it falls short of some cash, you can cover it with your credit card or a moving loan, whichever is budget-friendly.
The final word
Moving loans can help finance moving expenses. If you think these loans best fit your needs and budget, shopping for the loan is the next step. Do extensive research. If you are looking to take them through a broker, make sure you consult a reputed and whole-of-market broker. Be ready to ask them questions to know if they could help introduce you to a perfect lender.
For over 5 years, Alex Thomas has been working as a noteworthy content writer at Zeolitefunds. After graduating in Economics, he started working in the finance sector. His interest in loans has encouraged him to explore extensively. His write-ups in the form of blogs and articles have shown his exceptional knowledge. Alex’s work is a product of his hard-core research and writing expertise.