Why You Should Think Twice About Swimming Pool Loans

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If you love warm weather, the idea of sipping lemonade on the patio or splashing in the pool probably sounds like heaven. But if you don’t already have a pool and want to install one, your dreams could be crushed by sticker shock.

According to Home Advisor, it costs an average of $48,354 to install an in-ground pool. If you don’t have that money in the bank, you might be thinking about using swimming pool loans to finance your purchase. However, taking out a loan without doing your homework can be a costly mistake.

What are swimming pool loans?

Few people have enough savings for an emergency fund, let alone for a pool. Many people take out swimming pool loans to pay for the pool and other necessary costs, such as a filtration system or deck.

Here are the two main types of financing available for your pool.

1. Home equity loans

With a home equity loan, you borrow money using your home’s equity as collateral. Equity is the difference between your home’s value and what you’ve paid so far toward your mortgage.

For example, pretend you bought a home for $235,000. You work hard to pay down your mortgage, and now you owe just $170,000. Even better, your home’s value has risen to $250,000.

To calculate your home’s equity, subtract what you owe — $170,000 — from the current value of $250,000. Your home’s equity is $80,000.

How to calculate your home's equity

According to the Federal Trade Commission, you’re usually limited to borrowing 85% of your home’s equity. If your home’s equity is $80,000, that means the most you can borrow is likely $68,000.

With a home equity loan, you generally can borrow as much as $150,000 and have up to 20 years to repay your loan. Because your home serves as collateral, there’s less risk to the lender. That means it can offer you lower interest rates. However, if you fall behind on the payments, you could lose your home.

2. Personal loans

Another option is to apply for an unsecured personal loan. With a personal loan, you work with a bank or financial institution to get the funds you need for your pool. However, there are some downsides to using personal loans.

Although unsecured loans don’t require any collateral, lenders typically charge higher interest rates than they do on home equity loans because unsecured loans are a bigger risk. In addition, personal loans tend to have shorter repayment terms than home equity loans.

Depending on your credit and income, you could qualify for a low-interest loan of just 4.98% or a loan with interest rates as high as 35.99%. If you have poor credit, high interest rates can cause your pool’s cost to skyrocket.

For example, if you applied for a personal loan for the cost of the average in-ground pool — $48,354 — and qualified for a five-year loan at 4.98%, you’d pay $6,369 in interest charges. By contrast, if you got a five-year loan at 35.99%, you’d pay $56,458 in interest charges alone. Your loan would end up being more than double the pool’s actual cost.

If you have your heart set on a pool, it’s a good idea to compare offers from multiple personal loan lenders. This way, you can find out what interest rates and terms are available to you before you apply.

When a swimming pool loan makes sense

Deciding to take out a swimming pool loan is a big decision, and it’s important to think it through carefully. Because of the risks associated with taking on more debt, there are only a few situations in which taking out a loan makes sense.

If you currently own a pool and it requires repairs for safety reasons, to adhere to homeowners association regulations, or to keep up with zoning requirements, taking out a loan can help you do what you need to do. Borrowing money can be more cost-effective than paying penalties or fines.

Alternatively, installing a swimming pool might be a good idea if you’re selling your home and most comparable houses in the area have pools. However, be sure to compare the costs of a loan with the selling price you can expect. If you can’t make a profit or just break even, it might not be worth taking out a loan.

When taking out a loan is a bad idea

Borrowing money for luxury items like swimming pools can be dangerous. However, people sometimes convince themselves that installing a pool is an investment.

If you want to install a pool because you think it will increase your home’s value, it might be time for a reality check. According to HouseLogic, the biggest increase in value you can expect is 7%.

That means that if you had a $250,000 home and installed a pool, your home’s value would increase by $17,500 at most. Although that’s a decent improvement, remember that the average pool costs over $48,000 to install. So, the cost to add a pool offsets any boost to your home’s value.

Plus, the installation costs and loan interest charges are only some of the expenses you’ll face. Maintaining a pool is pricey. In most areas, the law requires you to install a safety fence. Plus, you’ll need a filtration system, a heater if you live in a cooler climate, and chemicals to prevent algae, bacteria, and germs.

If you’d still love a pool for your family, it’s a good idea to save up for it instead of taking out a loan. Doing so will save you money and help you enjoy it without the burden of monthly payments.

Adding value to your home

Taking out swimming pool loans can be a costly investment without much return. If you’re looking to improve the sale price of your house, check out these five strategies you can use to boost your home’s appraisal value.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

RATES (APR)loan amount
5.99% – 17.88%1 $5,000 to $100,000
5.69% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 17.88% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 4, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
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  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

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