Should You Get a Moving Loan to Finance Your Relocation?

Between stocking up on packing supplies, renting a moving truck, and storage, moving can get pretty expensive. With long-distance moves costing as much as $7,000, paying for everything out of pocket may not be possible. That’s where moving loans come in.  Personal loans for moving expenses allow you to finance part or all of your moving costs and pay them back over months or years. Here’s an overview of how relocation loans work, along with some of the best options out there.

What are moving loans?

Moving loans are a type of unsecured personal loan that you can use to fund some or all of your relocation expenses. You can use them to pay for things like movers, rental trucks, security deposits, moving insurance, and even the hotels you stay in on the way to your new place.  A relocation loan usually has lower interest rates than credit cards, so it may be a more affordable way to finance your move. But some loans for moving expenses come with high fees like prepayment penalties and origination fees, so make sure you consider the costs before you take one out.

How does a moving loan work?

Relocation loans allow you to borrow a lump sum of money to fund your move — for example, Upstart lends between $1,000 and $50,000 — and then you can repay it over a few months or years.  They have fixed interest rates, so your monthly payment will stay the same over the whole life of the loan. Relocation loans are also unsecured, so you won’t need to put up any collateral. And depending on which lender you choose, you may be able to get your money on the same day you apply. All of the lenders below use soft credit checks. That means you can see the rates and terms of your loan offer without it affecting your credit score. We recommend comparing rates from several providers to see which one offers the best terms.  To apply for a moving loan, you’ll need to fill out an application and provide your lender with financial documents like your pay stubs and bank statements.  Note: Too much debt can prevent you from qualifying or may result in a higher interest rate. Additionally, it may be more challenging to get a moving loan with bad credit. [table id=15 /] *Estimated APR

Upstart: Best for smaller moving loans

• Interest rates: 3.22% - 35.99%
• Loan amounts: $1,000 - $50,000
• Minimum credit score: None
• Loan lengths: Three or five years
• Minimum gross annual income: $12,000

Upstart probably won’t get you the very lowest interest rates out there, but it’s a great option for people who only need to borrow less than $2,000. With no minimum credit score required, it’s also good for people with low scores or new borrowers who haven’t built up any credit history. There are only two term lengths — three and five years — but you can pay your moving loan off early without any prepayment penalty. 

SoFi: Best for larger moving loans with good credit

• Interest rates: 5.74% - 21.28%
• Loan amounts: $5,000 - $100,000
• Minimum credit score: 680
• Loan lengths: Two to seven years
• Minimum monthly net income: Not disclosed

If you have a strong credit score and need a larger moving loan, SoFi is one of the best options out there. The online lender has no fees, typically offers competitive rates, and comes with a number of unique extra perks. With SoFi, you’ll have access to autopay discounts, unemployment protection, career and financial advising, networking events, and estate planning. 

Marcus: Most customizable terms

• Interest rates: 6.99% - 19.99%
• Loan amounts: $3,500 - $40,000
• Minimum credit score: 660
• Loan lengths: Three to six years
• Minimum annual income: Not disclosed

Marcus is an online lender operated by Goldman Sachs, and like SoFi, it’s targeted towards borrowers with good credit. It also offers no fees and an autopay discount, but where Marcus really stands out is its loan lengths. You can choose from nine options: 36, 39, 42, 45, 48, 54, 60, 66, or 72 months. Marcus doesn’t charge a prepayment fee either, so you can pay off your moving loan anytime you want. 

Universal Credit: Best for low credit scores

• Interest rates: 8.93% - 35.93%
• Loan amounts: $1,000 - $50,000
• Minimum credit score: 560
• Loan lengths: Three to five years
• Minimum monthly net income: None

Like Upstart, Universal Credit is ideal for anyone with a low credit score, or who’s looking for a smaller moving loan. It also offers a generous autopay discount of 0.5 percentage points. Universal Credit also has some nice features for borrowers looking to build up their credit: You’ll have free access to your credit score, credit monitoring, and a credit score simulator tool.

The pros and cons of taking out loans for moving expenses:

Moving loans typically have lower interest rates than credit cards, but may come with extra fees — like prepayment penalties and origination fees. And if you’re purchasing a home, taking on the new debt could cause issues with your mortgage approval. Before you get a loan for moving expenses, consider the pros and cons, which we highlight below. | Pros: | Cons: | | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | - Moving loans typically have lower interest rates than credit cards. - They have fixed repayment terms, so you know exactly when you’ll be out of debt. - They’re typically unsecured, so you won’t need collateral. - Lenders usually offer a wide range of loan amounts, allowing you to finance a small or large move. | - If you’re purchasing a home, getting a moving loan may affect your mortgage approval. - Moving loans can come with high fees. - You may not qualify if you have a low credit score. - Taking out a loan will add to your debt load and may strain your budget. |

Alternatives to moving loans

Moving loans aren’t right for everyone. Here are some alternatives you may want to consider.

Credit cards

Credit cards usually have higher interest rates than moving loans — the average APR for credit cards is 14.51% compared to just 9.09% for personal loans. But using your credit card to cover moving expenses may still be a good option if it has a long interest-free period or if you don’t need to borrow a large amount.  Some credit cards offer a 0% introductory APR on purchases for up to 12 months, but you’ll need good credit to qualify. You’ll also have to pay off your debt before the interest-free period ends, or you could get stuck paying a high-interest rate.

Job relocation package

If you’re moving out of town for a new job, your employer may help you with moving costs. Many companies offer relocation packages, but what’s covered varies. Some employers will reimburse all of your moving costs, while others will only pay for certain expenses (like movers). You can find out the specifics of your company’s policy by talking to the Human Resources department.

Savings

If you aren’t moving for a few months, you may be able to save up enough money to cover your moving costs out-of-pocket. Try to find ways to cut back your spending like canceling subscriptions and eating out less. Increasing your income by taking on more hours at work, getting a side hustle, or selling unwanted clothes or furniture can also help you save more money.

The bottom line

Relocation loans usually have lower interest rates than credit cards, which could make them a good option for financing your move. But they typically require good credit and may come with high fees depending on the lender. So before you take one out, make sure you understand the costs and can afford the monthly payments.