The American housing market is still in a state of strange fluctuation and transition. What has been an intense seller’s market is slowly changing to a buyer’s market. Either way, this means people across the U.S. today are moving into new homes.
Times have been challenging, there is no doubt. Perhaps you need to move but lack the funds to do so properly. Fortunately, different types of relocation loans are available to assist you in various ways during your move. Continue reading to learn more about relocation loans and how they might help you fund your relocation process today.
What Is a Relocation Loan?
Moving in modern times costs between $700 to $1,950 dollars on average. The median cost is $1,313 per relocation. This might not seem like a lot until you think of the expense as an additional (albeit non-refundable) security deposit or extra month’s rent. Relocation expenses also get significantly higher the further away you move. Many people simply cannot afford these extra costs to move from one location to another.
A relocation loan is essentially a personal loan used to pay for all expenses applicable to your move. Most personal loans are offered by multiple lenders for use toward whatever expenses approved borrowers choose to use the funds. Certain charity and other organizations also fund grants for relocation purposes (discussed in more detail below). Grant money does not need to be repaid provided the funds are used for their intended purposes.
Comparing Secured and Unsecured Relocation Loans
Secured loans are funds provided to borrowers who supply a source of collateral. Collateral is a means of lenders recouping their money if borrowers default on loan payments. A home mortgage is a secured loan, with the home itself providing the collateral. An automobile loan is a secured loan as well, with the vehicle title serving as collateral. If you fail to pay your home mortgage or auto loan for multiple repeated months your lenders have the right to foreclose on your home or repossess your vehicle.
A secured loan tends to offer more favorable annual percentage rates (APRs) because the provided collateral mitigates the risks taken by lenders. Many personal/relocation loans are unsecured, however. If you already have a car loan you cannot use your vehicle as additional collateral for a relocation loan. Many movers in need of a relocation loans are renters without collateral to offer. Homeowners who relocate typically also do not have collateral to provide because it is already tied up in their old or new homes.
APRs offered on unsecured loans might be higher, but they are also typically better than the long-term APRs offered on most credit card accounts. Sure, some credit card companies offer low-to-no-interest introductory APRs. Those APRs increase significantly after three, six, nine or twelve months, however. The APR and monthly payments on an unsecured loan stay the same for the entire loan term, which provides borrowers with stability and the ability to intelligently plan for monthly expenses. If you know you can pay off money charged to a low or no-interest credit card before the APR increases, you might get a better deal. Otherwise, an unsecured relocation loan is likely your best option.
Relocation Loan APRs
Because relocation loans are typically personal loans used to pay for moving expenses, APRs on these loans are consistent with national averages. Relocation loan APRs range approximately between six and twenty-six percent, depending on your credit (FICO) score. A FICO score is a three-digit number, which represents the creditworthiness of a borrower to prospective lenders. The range of FICO scores is wide and varies between 300 and 850. A FICO score of 850 is perfect. Higher FICO scores equate to lower APRs and vice versa.
Helpful Information About Your FICO Score and Loan Terms
Your FICO score might be the primary factor influencing the APR you are offered on you loan. It is not the only factor, however. Your residential and employment history are also considered by lenders. You savings and checking account balances also play a role. Ultimately, the more you bolster your creditworthiness with a lender, the better the loan terms said lender will offer you.
Ways to improve your FICO score do exist. If you know you will be moving in advance and know you will need a loan to do it, possibilities are available. For example, it is possible to download a free copy of your entire credit report from the AnnualCreditReport.com website once every year. If you discover any inaccurate reporting or fraudulent debts, this free report helps you get them corrected before applying for a loan. If you have outstanding balances on credit cards or other installment loans, pay down the one with the highest balance as much as possible. Pay down balances on all other accounts as much as possible as well. Make sure all your monthly payments are made on time for a least six months prior to applying for a relocation loan. Finally, do not apply for any other credit accounts for three to six months leading up to applying for moving funds. Doing all these things will help you get a better APR and better overall loan terms when you do submit your application.
Examining the Different Types of Travel Loans (and alternate options)
Many personal loans provided by lenders are not necessarily considered relocation loans, although the money is usable for whatever purpose a borrower chooses. Borrowing more than you need is advisable if possible. The ability to pay back unneeded funds in advance is always available. If a financial emergency arises you additionally know you are covered.
Certain organizations provided grants for needy households, which cannot afford moving expenses. Homelessness prevention organizations also help people in desperate situations relocate when needed. Charitable organizations such as the Housing Now program co-sponsored by The Salvation Army and Walmart also help people move when they need help the most.
When you know in advance you must move it is of course also an option to save money for the process. Sometimes people must move suddenly. Other times, especially in modern times (such as they are) it is simply not possible to save money for additional relocation expenses. In these cases, it is best to apply with one of the many top personal or relocation loan lenders in the country.
Best Relocation Loan Lenders for Your Move
Finding the right lender for your relocation loan starts with establishing the best FICO score and overall creditworthy status possible. Next, do some comparison-shopping between multiple relocation loan lenders. As a qualified borrower you might receive as low as a sub-six percent APR on a personal loan through Wells Fargo. Members of credit unions might get even lower APR offers from their personal financial institutions. Bankrate and the Lending Tree are both popular and reliable resources for matching the best personal loan lenders with your borrowing needs. A few more reliable personal loan lenders and resources to find them today include: