Should You Take Out a Personal Loan to Cover the Cost of a Move?

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Moving can be very expensive. Read on to see if signing a personal loan to cover a move is a good idea. 

People move for different reasons. Sometimes, it’s a matter of being closer to a loved one. In other cases, moving could become necessary to advance a career or take a better job.

No matter why you’re contemplating a move, you’re no doubt aware that there’s bound to be an expense involved. And if you don’t have the money in your savings account to pay for a move, then you may have to borrow to pull one off — especially if your move can’t wait. In that case, taking out a personal loan to pay for a move could be a much better choice than charging the expense on a credit card.

Why a personal loan is a smarter bet

In an ideal world, you’d have enough money to cover the cost of a move. But if that’s not the case and your move can’t be put off, then a personal loan may be your best option.

With a personal loan, you’re guaranteed a fixed interest rate on the sum you borrow and predictable monthly payments. With a credit card, your interest rate can vary, and your monthly payments could climb over time.

Plus, credit card debt can be instantly detrimental to your credit score. Even if you manage to make your monthly payments on time, the simple act of having a high balance relative to your total spending limit could cause credit score damage. With a personal loan, you won’t face credit score damage if you pay on time other than perhaps a five- to 10-point hit for the hard inquiry that’s done on your credit report when you apply.

Make sure you know what you’re getting into

Before you take out a personal loan to pay for a move, you’ll need to get estimates from moving services to see what costs you’re looking at. And you should do yourself a favor and pad those estimates in your head in case your actual costs wind up being higher.

Now, the amount it costs you to move will hinge on factors such as how much stuff you’re transporting and how many miles you’re going. Moving the contents of a small apartment is apt to be cheaper than transporting the contents of a five-bedroom house. And a move to a city 30 miles away is apt to be cheaper than one that’s 300 miles away.

Angi says the average cost of a local move is $920 to $2,530. For a long-distance move, you’re looking at $2,700 to $10,000 on average.

Figure out what costs you’re looking at, and then crunch the numbers to see what sort of monthly loan payment you’ll be on the hook for. You’ll need to make sure that monthly payment works for you, since falling behind could have serious consequences.

Finally, keep in mind that personal loan lenders commonly impose a borrowing minimum. And if your move is on the less expensive side, you may not meet that minimum. So before you assume that financing a move with a personal loan is an option, do some research.

The good news is that different lenders set different requirements. So if one lender has a personal loan minimum of $5,000 and your move is only going to cost $2,500, you may be able to find a different lender to write a loan of that size. But make sure to give yourself time to do that research so there are no unpleasant surprises.

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