Moving loans help you meet relocating expenses such as truck rental fees. Moving from one place to another can be expensive as well as hectic. You are to pack your stuff, hire movers and pay the fees for renting a truck. You may not have sufficient savings to meet the moving cost. If so, you can use moving loans.
They can meet the cost of hiring movers and renting a truck. Moving loans can be very expensive as they are paid back in a short length of time and carry slightly high interest rates. If your credit history is already below par, you may feel a pinch in your pocket when settling your account.
A golden rule of thumb says that you should start stashing away money to build your moving budget a few months ahead of relocating, but despite that, you may find yourself strapped. Luckily, loans for relocation are there to help you.
You can approach a reliable personal loan broker to find and compare various deals available on these relocation loans.
Ways to get moving loans at lower interest rates
If you are on no account, can you be so sure about your moving cost? The actual moving cost can surpass the estimated savings, and, as a result, you will have to borrow money. Your lender will take into account a lot of factors, such as your repaying capacity, credit history, etc. You can improve your chances of qualifying for moving loans at a lower interest rate.
See if you can do up your credit rating
Check your credit report to identify the areas that need to be fixed. You should take out a credit builder loan repaid over a period of 6 months. On-time payments will give a boost to your credit score.
Your lender may also charge high interest rates when you have no credit history at all. It is not as bad as having a poor credit rating, but lenders do not have a way to be sure about your payment behaviour.
They will take you for a high-risk borrower. Credit builder loans can come in handy to build a credit history, too. Sometimes, your credit score is not bad because you missed payments but because you owe too much.
When you already owe too much money, your lender will be skeptical about your repaying capacity. Make sure you keep your credit utilization ratio also low.
Avoid making multiple inquiries
You may apply for moving loans from various lenders in the quest for lower interest rates. Every time you apply for a loan, your lender will run a hard check on your credit report. Each inquiry will pull at least five points, and you will see a sudden sharp increase in your credit points.
Having applied to many lenders also insinuates that you are heavily dependent on a debt. Your desperation can turn against you and you will be straightaway refused a loan.
Avoid applying to different lenders at the same time. Make sure you do research about interest rates and fees beforehand so you can pick a competitive lender. You can avoid the impact of multiple inquiries if you get prequalifying letters from lenders.
Because a soft check is run, there is no risk of losing credit points. A pre-qualifying letter will help you pick the most affordable deal. However, bear in mind that the actual rates will vary.
Consider other types of loans
Moving loans are expensive because they are unsecured. A lender cannot recover their money back in the event of a default. Because the risk involved in loaning you is too high, your lender will charge high interest rates. What should you do?
You should secure your loan against a valuable asset. Your lender can repossess your asset to take their money back if you make a default. The collateral will be worth more than the borrowing sum.
Secured loans come with lower interest rates as they abate the risk involved in loaning you money. The collateral will be, more often than not, your house. Make sure you do not miss a payment otherwise you will lose your house.
Use credit cards
What if you need a small sum of money to fund the moving costs? Moving loans will not be an appropriate solution, not because they do not come with a smaller borrowing sum but because they will prove to be very expensive. You should rather consider alternatives to loans. Here comes in a credit card.
Credit cards can easily fund the gap in your moving budget. Moreover, you can avoid paying interest provided you pay back the whole sum in the grace period. Interest is charged when the grace period is over.
A line of credit is also a good alternative. You will withdraw money from the available balance and only pay interest on the used amount. A line of credit does not require you to pay down the whole sum in one go. You can pay back a portion of money as and when you want, and interest will be charged only to the unpaid balance.
Are moving loans actually a good idea?
These loans are expensive regardless of your credit health. Securing your loan is not always an option. Most times, lenders will not allow for it. You should carefully examine how much you can actually afford to pay back.
With the help of online calculators you can get the estimated cost. Find out if your budget has the scope to meet this additional cost. Make sure to keep the leeway for extra payments because the actual costs will be higher than the estimated ones.
The takeaway
If you are moving and need money, consider your options carefully.
- Use credit cards or a line of credit if you need smaller money.
- Moving loans are a good choice when you need a large sum of money. However, make sure you can repay the debt on time.
- If you find that your budget does not have scope, you should try to bring down the moving costs. For more such informative articles, visit here.
