You get a job offer for a dream opportunity. The work would be challenging and rewarding, the company is well-respected, and you’d even get a sizeable raise. The one catch: you’d have to move to another state.
Relocating for a new job can be exciting, scary, and expensive. If you don’t have enough money stashed away in savings to cover the cost, you may be thinking of charging your moving expenses to a credit card. But there may be a better way: using a personal loan.
What are personal loans?
A personal loan is a form of unsecured loan, meaning you don’t have to put down any property as collateral. Personal loans are offered by banks, credit unions, and online lenders. You can borrow anywhere from $1,000 to $100,000 to pay for major purchases or expenses. And, some lenders offer loan terms as long as seven years, making the monthly payments more affordable.
Each lender will have their own qualification requirements. However, you’ll generally need to have good credit and a stable income — or a job offer in hand — to be eligible for a personal loan with a low interest rate.
Taking out a personal loan to pay for a move
Before taking out a personal loan to pay for your relocation expenses, follow these five tips:
1. Create a budget
Come up with a moving budget before applying for a loan so you know exactly how much the move will cost you. Make sure you account for all of the different expenses, including:
- Moving truck
- Boxes and packaging materials
- Security deposit/first month’s rent on a new apartment
- Vehicle registration and new driver’s license
- Utility deposits
2. Do some of the work yourself
After you’ve come up with a budget, look for areas where you can save money. For example, a full-service moving company can make the process much easier. They’ll handle every step of the move for you, including packing your possessions and transporting them. However, you’ll pay a premium for that convenience.
If you’re willing to do some of the work yourself, you can save a lot of money. According to HireAHelper, a long-distance move with a full-service moving company costs $6,000, on average. By contrast, the move would cost just $1,921, on average, if you did the labor yourself. By taking on the hard work, you’d save over $4,000.
3. Borrow the minimum
Once you’ve come up with a budget and identified ways to trim your expenses, you can determine how much money you need to borrow with a personal loan. While it may be tempting to borrow more than you need to give yourself more wiggle room, try to resist that urge. Taking out a large loan means you’ll also pay more in interest, and you could end up wasting the cash on unnecessary purchases.
4. Compare offers from different lenders
Don’t just submit an application with the first lender you find. Instead, compare offers from multiple personal loan lenders to ensure you get the best rates. Interest rates and repayment terms can vary from lender to lender, so shopping around will help you find the best loan for your situation.
5. Come up with a repayment plan
Once you’ve taken out a personal loan, it’s important to come up with a repayment plan. Make sure you can comfortably afford the monthly payments. If you want to pay off the loan as quickly as possible, look for areas in your monthly budget where you can cut back. Or, consider boosting your income by taking on a side hustle and applying the extra money to the loan. By reducing your spending and increasing your earnings, you can pay off your loan early and save money.
If you have a job opportunity in another state but are worried about the cost of moving expenses, taking out a personal loan can be a low-cost way to get the money you need. By evaluating your options, coming up with a budget, and doing some of the work yourself, you can pay for your move and enjoy your new job.
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