If you decide that now is the time to start this project (or if the decision is made for you and a costly repair is required, whether you like it or not), keep these home renovation loan benefits and drawbacks in mind.
• Advantage: Usually no collateral. If you are unable to repay the loan, you will not be required to pledge collateral (your home or other assets) to obtain loan payback.
• Disadvantage: Higher credentials. Based on the lender’s precise needs, a good credit score and a favorable credit history will make you more appealing. If you have bad credit, you may be denied a personal loan for home improvement.
• Advantage: Quick funding. If you are authorized, the money might be in your bank account within 24 hours (this is variable by a lender.)
• Disadvantage: Higher interest rates. Although the majority of unsecured personal loans have set annual percentage rates (APRs), they are often higher than other home improvement loans. Remember that the lender bears the majority of the risk in this transaction. Thus a higher APR helps ensure that they can recuperate at least some of their investment.
• Advantage: Making use of unspent monies. Lenders frequently offer personal loans in fixed increments and will decide how much to authorize based on your credit score and financial history. If you are accepted for a loan that is greater than the cost of your home improvement project, you might utilize the surplus to pay off the debt that may have a higher interest rate than the loan itself.
• Disadvantage: incurring debt. In the first place, can you afford a monthly loan payment? Before you apply, consider your financial situation. What you don’t want is for this extra expense to become overwhelming. Even if your home is not in danger of foreclosure, your credit history may suffer if you fail to repay the loan.
