Looking for the best home improvement loan?
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Most Americans have at least one home improvement project they’d like to get off the ground. But finding an extra couple of thousand dollars in your household budget to do renovations just isn’t an option for most people.
Enter home improvement loans. Home improvement loans help you take decisive action towards getting your most important projects done. The best home improvement loans offer a right mix of low-interest rates and affordable monthly payments. Lenders usually give you choices on length of repayment so that the payment amount makes sense for your budget. Here’s a list of some home improvement loans available in 2020.
Best Egg is a newer online lender offering personal loans up to $35,000. The company was started in 2014 and has since loaned more than $9 billion to more than half a million people. The smallest loan you can get is $2,000, which could still help some for a home improvement project. Best Egg offers unsecured loans with interest rates as low as 5.99 percent. You need excellent credit and a six-figure household income to qualify for this ultra low-interest rate. One of the biggest reasons to borrow from Best Egg is its instant approval process. You can be approved online right away and funded within two days of applying for a personal loan. This is unheard of in the lengthy underwriting process for most banks. Loan origination fees range between 0.99 and 5.99 percent. There is a $15 late fee and a $15 return check fee if a payment declines.
Opt for a Best Egg home improvement loan if you don’t have a significant renovation project to complete. The $35,000 max makes more significant projects like a full kitchen remodel more challenging. If you need funds right away to get started, though, it might be worth pairing your Best Egg loan with another financing option. The pro is getting access to the money right away, even if it means having to make two separate payments every month.
SoFi is a more conservative version of Best Egg. The online lender offers unsecured home improvement loans, but if you apply, expect a lengthier approval process. The lender provides a home renovation tool that allows you to calculate the amount ou need to finish your home improvement project. The cost estimator shows what you need to complete the renovation and what your interest rate will be on loan. SoFi boasts low-interest rates and fixed payments on its home improvement loans. There’s no origination fee or prepayment penalty if you decide to pay off the loan balance early.
Choose SoFi if you want to borrow to complete full renovation projects. This virtual lender provides loans for home improvement ranging from $5,000 to $100,000. The APR comes somewhat unpredictable, with a wide range of 5.99 percent with AutoPay to 19.07 percent without AutoPay. If you’re worried about your credit history, SoFi does allow co-applicants on home improvement loans. This can mean qualifying for a more substantial loan amount or lower interest rate depending on your financial situation. If you don’t have a co-applicant, you’ll need a minimum 680 credit score to qualify. Expect SoFi to take at least a week to process your application and fund your account.
Prosper is a peer-to-peer lending service offering home improvement loans of $2,000 to $40,000. The lender you choose isn’t a bank but another person looking to invest personal money into a loan. A top credit score isn’t needed to get a home improvement loan with Prosper but won’t get a reasonable interest rate without proper credit. Interest rates range from 6.95 to 35.99 percent. The company doesn’t just use credit history to determine whether or not your loan gets approved. It uses a risk rating system that takes into account hundreds of different data points about applicants. This can include your income, employment status, and more. The online lender has given more than $16 billion in loans since it launched in 2005.
Funding is relatively short with Prosper. Most loans are funded within 2 to 5 days. If there are any issues with your approval, your loan application expires after 14 days if it’s not at least 70 percent funded. Add a co-applicant with a strong credit history if you’re having trouble getting approval or want to avoid extreme interest rates. Origination fees on home improvement loans range from 2.41 to 5 percent. The late fee is $15 as long as that’s not less than 5 percent of your payment due.
You won’t need to wait until you have stellar credit to get loans for home improvement with Avant. Avant caters to borrowers with bad credit who are looking for ways to consolidate debt and gain better financial management skills.
This Chicago-based lender is one of the largest to focus on borrowers with low to average credit. There’s a soft credit check available if you want to pre-qualify before filling out the full application. If you start with a high-interest rate on your home improvement loan, you can refinance later for a better price as long as you’ve had at least 6 months of on-time payments. Because Avant targets riskier borrowers, the fees are higher. Each loan comes with an administrative fee of up to 4.75 percent. The late fee is up to $39, and the return check fee is $15. To qualify for an Avant home improvement loan, you need at least a 600 credit score and household income of $20,000 or more.
Another home improvement loan for people with poor credit is Upstart. You need a minimum 580 credit score to qualify for an Upstart loan. But what makes this lender stand out from competitors is the decision to offer loans to borrowers with little to no credit history. Most lenders treat borrowers with no credit history as if they have bad credit. With Upstart, you can use a small personal loan to finance your home improvement project while building up your credit history. You can’t have a bankruptcy or other delinquent loans on your credit report to qualify. The company provides a hardship program that temporarily suspends payments if you are experiencing financial setbacks. Most loans fund the next business day after approval. The origination fee ranges from 0 to 8 percent. Late payments are 5 percent of the amount due or $15, whichever is greater. There’s an unsuccessful payment fee of $15.
Because the lender targets younger borrowers with high earning potential, having a job or job offer is required. The minimum household income is only $12,000, but when reviewing your application, the company looks at your college degree, area of study, and job history. The APR on an Upstart home improvement loan ranges from 6.18 to 35.99 percent, with loan amounts of $1,000 to $50,000. If you live in Iowa or West Virginia, you aren’t eligible for an Upstart loan.
Wells Fargo Personal Loans
Not everyone is ready to take their loans into the digital age. If you prefer doing business in a brick and mortar location, consider a Wells Fargo personal loan to cover your home improvement costs. The top benefit of getting home improvement loans through Wells Fargo is that the bank can fund the loan on the same day. The lender offers both a secured and unsecured option giving you more flexibility when it comes to repayment terms. Account-holders have the option to apply remotely. If you don’t have a Wells Fargo account, you can only apply for home improvement loans in a bank branch.
You can qualify for Wells Fargo home improvement loans with fair credit if you have an existing relationship with the bank. If it’s your first time banking with Wells Fargo, opt for this loan only if you have excellent credit and a low debt to income ratio. To get same-day loan funding, you have to have your online application completed before 2 pm and be a current Wells Fargo customer.
Choosing the Best Home Improvement Loans
The best home improvement loans in 2020 include options for people with all credit and income situations. With unemployment on the rise in 2020, loan options for poor credit and low income are needed now more than ever.
If you haven’t experienced a change in income, there’s a wide range of loan options available to help you get access to the funds you need within just a few days. Take your time to compare loans to avoid getting hit with hidden fees.
Instant approval isn’t always a sign; you should accept the loan offer. Set up a call with a customer service rep to get more information on the amount you’ll spend on administrative fees. For more information and personal loans tips, check our blog for updates.
Frequently Asked Questions
Learn Home Improvement Loan basics
What are home improvement loans?
Home improvement loans aren’t like student loans or mortgage debt, where you take out a loan that can only pay for education or buying a home. Home improvement loans are any type of personal loan used to make changes to your house. These changes can be cosmetic or required for safety reasons like removing a tree branch that fell onto your roof during a storm. There are two types of loans available for home improvement: secured and unsecured.
What are secured home improvement loans?
Secured debt requires collateral for approval. One common type of secured debt is a mortgage loan. With a mortgage loan, your real estate property is an asset attached to the loan as collateral. It means that if you default, or can’t pay the loan, the lender takes the property to make up for the loss.
Another type of secured debt is a credit card. Secured credit cards are most common for people looking for ways to build credit. With a secured credit card, cash is put into a savings account with a bank to serve as collateral for a loan. The money in the account can’t be accessed until the end of a term set by the lender. The lender can collect the cash at any moment if you fall behind on payments.
Secured debt might seem like a win-win situation, but it comes at a higher cost to you than the lender. You could lose hard-earned cash or your home if you face an unexpected financial crisis. But lenders are more willing to offer secured loans because they are less risky. Interest rates on secured debts are usually much lower than that of unsecured debt. Lower interest rates mean lower monthly payments.
Another benefit of secured debt is getting access to more jumbo loans. Lenders extend more credit to borrowers who have a guaranteed way to repay if they fall behind on their loan payments. You can also expect a more extended repayment period on secured debt. Lenders make money on your loan by charging interest. The lender makes more money on the longer term loans. That is also a perk for borrowers because it means stretching out the loan balance over a longer time and lowering your payments.
What are unsecured home improvement loans?
Most people think of credit cards when thinking of unsecured debt. Unsecured debt isn’t attached to an asset. If you can’t repay the debt, the lender loses money. That makes unsecured loans much riskier for lenders than borrowers.
The pros of unsecured loans are that there’s no risk of your losing personal property or valuables if you default on the loan. You can also expect a shorter repayment period, which is better if you have a reasonable interest rate on your loan.
But the riskier loan comes at a higher cost to borrowers. Because lenders have no guarantee of repayment, getting a low-interest rate is more difficult unless you have excellent credit. Lenders are also less likely to provide unsecured loans in large amounts. If you don’t have good credit, it’ll be hard to qualify for an unsecured loan at all because lenders don’t have proof that you have proper financial management.
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