Your Practical Guide to Unsecured Home Improvement Loans

 April 20, 2018
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How Student Loan Hero Gets Paid

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You may have borrowed money to buy your house, so why not borrow some more to fix it up? After all, taking out an unsecured home improvement loan can be a convenient way to pay for renovations and repairs.

But it’s really just a personal loan option with a fixed purpose, and it’s not the wisest choice for every homeowner. Here’s what you need to know.

How to find an unsecured home improvement loan

An unsecured home improvement loan is much like an unsecured personal loan. You qualify for a borrowing amount, interest rate, and repayment term based on your credit profile. Many banks, online or otherwise, market their personal loans for home improvement.

But no two lenders are exactly alike. Earnest, for example, promises to consider your education and career in addition to your credit when awarding a loan offer.

Different lenders also allow you to borrow varying amounts. Avant home improvement loans, for example, top out at $35,000. LendingClub has an unsecured home improvement loan maximum of $40,000, which could come in handy for bigger house projects such as building a pool.

These differences spring up from lender to lender, so it’s wise to shop around to find your best personal loan companies.

Besides online lenders, consider credit unions and more traditional banks. They could offer longer loan terms if you prefer repaying the funds over, say, 12 years as with SunTrust instead of 12 to 36 months.

Aside from considering offers from different kinds of lenders, score your best rates on home improvement loans by using these practices:

  • Improve your credit score, because mere percentage points can affect how much interest you’ll repay.
  • Compare the APR of your offers, as it accounts for both your interest rate and origination fees.
  • Avoid lenders with prepayment penalties, rigid repayment plans, and variable rates that could spike.

Weigh the downsides of home improvement loans

An unsecured home improvement loan is an attractive way to make a fix around — or outside — your home. You could replace your broken water heater in the dead of winter, for example, so that you don’t have to freeze while you save up.

But before you go all-in on your home improvement purchase, consider the cons of these loan products.

First of all, home improvement loans — and personal loans in general — can carry burdensome interest rates. Some lenders, such as LendingClub, charge their least creditworthy customers with an APR as high as 35.89%.

Say you have fair credit and can manage an APR of 20.00%. That $15,000 you borrow to remodel your kitchen would cost you $8,845 in interest with a five-year repayment plan, for a total of $23,845.

Plug your borrowing scenario into our personal loan calculator. You’ll see how much your home improvement project will really cost. It might be more expensive than you expected.

Aside from relatively higher interest rates, an unsecured home improvement loan can be dangerous if you select a repayment term that’s too short.

Most personal loans allow you to repay your debt in one, three, or five years. If you need more time to repay your loan, consider lenders that’ll grant you a longer term. Just remember the longer your repayment, the more interest you’ll have to repay.

Consider the alternatives to an unsecured home improvement loan

You might be considering a loan because it will significantly increase the value of your home (although not all renovations do). You could also elect to borrow money because your house needs an emergency repair that’s not covered by homeowners insurance.

Be aware that an unsecured home improvement loan isn’t the only way to get this done.

In the scenario that you have a pressing reason to borrow — holes in your roof, for example — consider the alternatives to unsecured home improvement loans. Your options include:

  • Home equity loans: This could be a better option if you’ve paid off a significant chunk of your home but don’t have excellent credit. A home equity loan allows you to borrow a large percentage of your home’s equity — that is, the value of your house minus the amount you still owe on your mortgage. The worst-case scenario is that if repayment goes south, your lender could foreclose on your home.
  • Title I Home and Property Improvement loans: This might be a better choice if you plan on borrowing a small amount. You won’t need to secure the loan with your mortgage unless you borrow more than $7,500. The U.S. Department of Housing and Urban Development insures the loan, but you’d still negotiate an APR with an approved private lender in your area.

For home improvement projects that don’t have a time-sensitive deadline, you could save up to avoid borrowing money altogether. Reserving part of your paycheck for an extended period could stack up the funds you need without having to go to a lender.

That’s one of the best alternatives to an unsecured home improvement loan if it’s possible in your situation.

Borrow home improvement loans responsibly

If your home improvement project is more of a passion project, you might seek alternatives to taking on debt.

But if you have a much-needed home repair, excellent credit, and a solid plan for repayment, an unsecured home improvement loan could be the perfect solution. To ensure you’ll benefit, learn how a calculator can help your decision.

Interested in a personal loan?

LendingTree allows you to compare rates from multiple lenders by filling out one easy form. How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

RATES (APR)loan amount
5.99% – 18.85%1 $5,000 to $100,000
4.37% – 35.99% $1,000 to $50,000
5.94% – 35.97%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $40,000
7.99% – 29.99%4 $7,500 to $40,000
compare rates on Lendingtree now
NMLS #1136: Terms & Conditions Apply
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 18.85% APR (with AutoPay). SoFi rate ranges are current as of March 19, 2020 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 creditworthiness, years of professional experience, income and other factors. See APR examples and terms. 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.
    See Consumer Licenses.
  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. The loan terms presented are not guaranteed and APRs presented are estimates only. To obtain a loan you must submit additional information and documentation and all loans are subject to credit review and our approval process. The range of APRs is 7.99% to 29.99% and your actual APR will depend upon factors including your credit score, usage and history, the requested loan amount, the stated loan purpose, and the term of the requested loan. To qualify for a 7.99% 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. All loans are made by Cross River Bank and MetaBank®, N.A., Members FDIC.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% 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. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.