The Best Home Improvement Loans for 2020

Best home improvement loans

Upgrading your home can be expensive, but certain improvements are just plain necessary. You might need to fix up some damage to your roof, or you might have some remodeling to do before selling your house. If time is of the essence and you can’t pay for your home improvement projects in cash, then a personal loan could be an option worth looking into.

You should be careful, however. Loan terms can vary widely, but your credit will help determine your APR. The interest rate, in turn, plays a major role in how much you’ll pay over the life of the loan. Poor credit typically means higher interest rates and larger totals, so do your best to build up your credit score before you decide on a loan.

It’s best to reserve personal loans for home improvement projects that are immediately necessary or can help you raise the value of your home before selling. Any hazardous problems with the house should be fixed immediately for your safety, and taking out a loan may be the only way to get the work done. If you’re fixing up your house to sell it at a higher price, then the added value should help you take care of the loan repayment once it sells.

Examples of home improvement projects you can complete with a personal loan include:

  • Kitchen or bathroom remodeling
  • Energy-efficient upgrades
  • Structural or otherwise necessary repairs
  • Exterior additions (swimming pool, deck, etc.)

These projects will either make your home safer or increase its value so you can fetch a higher price from a buyer, so they tend to be valid reasons to look for a loan. Not all loans are the same though, and there are a few key factors to keep in mind before you make a decision.

Weighing Your Personal Loan Options

It’s impossible to make an informed decision if you don’t compare your options first. There are many viable personal loans for home improvement. Interest rates and length of term aren’t the only factors to consider when choosing one, however. You also have to think about fees, loan maximums, and whether or not you qualify to borrow money from a particular lender in the first place. Below you’ll find some of the best personal loans for home improvement along with a quick breakdown of each. Use this information to guide your decision-making so you can spruce up your house without ending up in a financial sinkhole.

Best Egg

If you’re looking for a mid-range loan that has no minimum income requirement, Best Egg might be your lender of choice. Loans from Best Egg max out at $35,000 and average $2,000. The average interest rate comes in at 18%, with fees ranging from 0.99% to 5.99%, and the average term is three to five years. If your credit score is at least 640, you could start putting your loan to use in 48 hours.

Highlights:

  • No minimum income
  • Modest minimum credit score requirement

SoFi

You’ll need a slightly higher credit score (680) than you would for Best Egg in order to borrow money from SoFi, but the maximum loan they offer is a hefty $100,000. The term of a SoFi loan can be longer than that of a Best Egg loan, with terms ranging from two to seven years.

Highlights:

  • High maximum loan amount
  • No fees
  • Low interest
  • Wide-ranging lifespans

Payoff

Like Best Egg, Payoff loans cap out at $35,000. The average loan from this lender is $5,000 with an interest rate of 13%. Fees can be anywhere from 0% to 5%. You will, however, need a minimum credit score of 640 and a minimum annual income of $40,000 to borrow from Payoff. You can expect to pay off your balance over the course of two to five years.

Highlights:

  • Low APR
  • Low fees

LendingPoint

The fees on a personal loan for home improvement from LendingPoint are similar to those from Payoff. LendingPoint loans range from 0% to 6% in fees. The average interest rate is the highest on this list at 24%, but the minimum required credit score is only 580. While the average loan is $2,000, you can borrow up to $25,000 to be paid back over two to four years.

Highlights:

  • Low fees
  • Low minimum credit score

Liberty Bank

Liberty Bank is a good option if you’re looking for a smaller loan of up to $10,000. There’s no minimum credit score or income required—although the average credit score is 675—the average interest rate is 22%. Loan life ranges from one to three years, so keep Liberty Bank in mind if you’re doing a home renovation on the relatively small side.

Highlights:

  • No minimum income
  • No minimum credit score

Upstart

Although they don’t offer the whopping $100,000 maximum that SoFi does, Upstart personal loans max out at $50,000—enough to do some major home improvement projects. The average loan is only $1,000, however, and the average interest rate is 15%. Minimum credit score and income requirements are 620 and $12,000 respectively, and loan terms vary between three and five years.

Highlights:

  • Low interest
  • Low minimum income
  • Modest minimum credit score

Lending Club

Lending Club home improvement loans max out at a similar $40,000 and have the same average as Upstart ($1,000). Their average interest rate for a personal loan for home improvement is 16%, which is just one point away from Upstart’s 15%. Origination fees range from 1% to 6%, and late fees are whichever is greater between $15 and 5%. There is no minimum income requirement, but you do need a minimum credit score of 600 to borrow money. The average Lending Club loan term is three to five years.

Highlights:

  • Low interest
  • No minimum income
  • Low minimum credit score

Prosper

Prosper, like Lending Club, also has a max loan rate of $40,000 and no minimum income requirement. The minimum credit score is 640 with an average of 675, and the average loan amount is $2,000. The average interest rate is 14%, with fees ranging from 2.4% to 5%. Like Best Egg, Upstart, and Lending Club, Prosper’s personal loans average three to five years in term.

Highlights:

  • Low interest
  • No minimum income
  • Modest minimum credit score

As you can see, many of these options have similar fees, minimums, and repayment periods. Small details can make a huge difference in your ability to repay the loan, however, so set yourself up for success with a loan that you can handle comfortably. There are plenty of free online resources that you can use to determine what kind of personal loan is best for your home improvement project.

The most important thing to remember is the amount of money that you borrow won’t be the same as the amount you repay—so loan term and interest rate will be critical factors to consider. If the project you have in mind isn’t completely necessary for the safety of your home, or if you’re not planning on selling your house anytime soon, a personal loan might not be the best route to take. Always do the proper research so you can make the best decision for your home and your financial future.

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