What Is A Moving Loan?

A moving loan is a personal loan that you can use to pay for the cost of moving. Between hiring movers, packing and acquiring moving insurance – should you choose to pay for all three or any combination of the three – relocation can be costly.

Moving loans can help cover the cost of these expenses and others you may incur in connection with a move so that you’re able to relocate without the added stress of having to potentially empty out or put a major dent in your savings.

Now, let’s dig a bit deeper into loans for moving by exploring how they work, the costs they cover, their pros and cons, and whether a moving loan is a solid option for you.

How Do Moving Loans Work?

With a moving loan, you’ll receive a fixed amount of money to cover your moving costs. Because moving loans are unsecured, you don’t have to put up any collateral to get a loan. However, you’ll need a good credit score to obtain lender approval.

If a lender ultimately approves your moving loan request, they’ll deposit the loan for moving expenses directly into your bank account – often within just a few days of approval.

What Costs Do Moving Loans Cover?

Moving loans cover a variety of costs related to moving. Some of these costs, such as the ones often necessary for hiring movers and purchasing packing materials, are pretty straightforward, but moving loans can pay for additional fees. These might include the cost of home cleaning, temporary storage for your belongings, utilities, insurance and a security deposit.

Qualifying For A Moving Loan

To be approved for a moving loan and receive a reasonably good interest rate and repayment term, you’ll likely need a stout credit score of around at least 650. Other qualifications you’ll likely need for loan approval and for the conditions of the loan to be attractive are a low debt-to-income ratio (DTI) and proof of income showing your ability to repay the loan over a designated time frame.

Before agreeing to accept any moving loan, you’ll want to consider the upcoming variables, which can have a large impact on whether the loan is going to be suitable for your budget, your timetable for collecting the funds and your timetable for paying back the money you’ve borrowed.

Interest Rate

This might be the most important consideration for your moving loan. Your interest rate, measured in annual percentage rate (APR), will determine how expensive your loan will be to pay back. In short, your APR is the amount you can expect to pay yearly for borrowing money, and it includes what you’ll pay in interest and any fees associated with your loan.

When looking for a moving loan, you should compare APRs from various lenders to get the least expensive loan you possibly can.

Fees

Taking out a moving loan means you’ll likely pay a loan origination fee that ranges from 1% – 8% of your loan amount. It’s wise to go with a lender that doesn’t charge a high origination fee.

Access To Funding

If you need your moving loan money immediately, you’ll want to consider how quickly a lender can provide the funding. Some lenders can fund your loan request in a few days or even the same day you’re approved, while others can take several weeks to dispense the money.

Repayment Term

The longer your loan repayment term, the lower your monthly payment. However, this means you’ll pay more in interest over the length of the loan. Alternatively, a shorter loan term means your payments will be higher, but the loan won’t cost you as much in the end.

Pros And Cons Of Moving Loans

While moving loans can be a great resource for covering moving costs, they come with risks. Consider the pros and cons of moving loans before applying for one.

Moving Loan Alternatives

Depending on your financial situation, you may have other options for covering your moving costs. Next up are a few to keep in mind.

Credit Cards

Instead of taking out a personal loan for moving, you could opt to charge moving expenses to a  credit card that already belongs to you. Your card may have a high credit limit, which could allow you to cover many of your expenses. Plus, this would let you pay for your move without applying for additional funding.

Relocation Assistance

If you’re moving for a new job, your employer might cover some or all of your moving costs. When negotiating the terms of new employment, consider requesting relocation assistance that can help pay for your move without you having to go into debt.

Paying Out Of Pocket

Another way to avoid debt related to moving expenses is to pay these expenses out of pocket. This could include using your personal savings, or selling some of your possessions, to cover moving costs. Another benefit of selling some personal items is that you’ll have less to move during your relocation, potentially reducing your overall moving expenses.

How To Get A Moving Loan

Follow these steps to apply for a moving loan and get the funds you need to pay for your next move:

• Check your credit score. Your credit score will help you determine if you’re likely to qualify for a moving loan. It’ll also give you a decent idea of your loan options, if you’re approved.
• Research potential lenders. Find which lenders offer moving loans and compare conditions of their loans, such as interest rates, fees and repayment term lengths.
• Obtain loan documents. When you apply for a loan, most lenders require a form of identification, proof of income and information on any debt you owe.
• Submit an application. Once you’ve chosen a lender and have the required documentation, you can formally submit a moving loan application.
• Review your loan terms. If the lender approves you for a loan, they’ll provide your loan details in a document. Review all the conditions of the loan to ensure your satisfaction.
• Accept the loan and receive your money. If everything looks good, you can accept the loan, after which the lender will deposit the funds into your bank account.

FAQs About Moving Loans

Want to know more? Here are answers to some of the most commonly asked questions about moving loans.

What can I use a moving loan for?

You can use a moving loan for virtually any moving-related expense, including transportation costs, utilities, shipping materials, temporary storage costs and cleaning fees.

How can I get a moving loan?

Many banks, financial institutions and other lenders offer moving loans. You’ll first need to check your credit score to get an idea of whether you’ll qualify for a moving loan. Then, if you’re confident you will, gather important personal documentation such as your ID and proof of income.

Once you’ve found a lender that’s willing to offer suitable loan conditions, you can apply for a moving loan. Shortly after you’re approved and you agree to the final conditions of the loan, you’ll pocket the money you need to pay moving costs.

Are there alternatives to moving loans?

If you don’t want to take out a loan to pay for your move, you could potentially pay out of pocket, with a credit card or by way of a new employer reimbursing you for moving costs.

The Bottom Line: A Moving Loan Can Make Relocating Less Stressful

A moving loan is a personal loan that provides a great way for some borrowers to pay for some or all of the costs associated with moving. Remember, moving costs often aren’t just the costs that come with transporting your personal items from one place to another, but they can also include everything from a security deposit to cleaning fees.

If you need help keeping tabs on your moving costs and other expenses, the Rocket Money^SM app can help. Sign up for Rocket Money and effortlessly track your spending so you can more carefully budget for the future.