Picking up and moving across the country is no easy feat. From organizing your belongings, packing, moving, to setting up a new space, the entire process can be overwhelming.
The cost of a long-distance move is not a cheap expense either. With costs running into the thousands, it may seem tempting to take out a personal loan to finance the costs. But while it’s helpful for some, a loan isn’t a one-size-fits-all option.
I recently spoke with Jeremiah, a young adult who recently embarked on a move from the South to the West Coast, and asked him about his experience paying for a move from one coast to the other.
Average cost of a long distance move
The average cost of moving abroad can range from $4,000 to $8,000. However, costs can fall below or far exceed this range depending on the total distance traveled, the weight of your move, and the amount of time it takes to transport your belongings. This number does not include the cost of living in another city – also known as the cost of living index – and only takes into account moving-specific costs.
Hindsight is 20/20: How a Low Interest Loan May Have Been Helpful in Alleviating Moving Anxiety and Promoting Prudence
When Jeremiah took the plunge, packed up his life and moved to California this year, he said he wasn’t considering a loan because he was moving to another rental property and had some savings. “I had saved a small amount of money the year before for a possible down payment on the house,” he said. “This move would have been for a rental fee, so I didn’t need all that cash and was able to use some savings to pay for it.”
However, he added that if he were to move again, he probably wouldn’t take out a loan if he had the same nest egg, but that he does see the appeal of taking out a low interest loan on top of the money for more ease of mind.
“The idea of a loan would make me a little more cautious about the move [or] less impulsive [or would] makes me really think about all the reasons why I want that adventure,” he said.
How do you know when to take out a loan for moving costs?
Right now may not be the ideal time to borrow a personal loan, especially if you have unstable or low credit. Interest rates are currently at an all-time high — according to a Bankrate survey, the average rate is 12.10 percent — and experts aren’t sure when the Fed will start cutting rates.
Because the average rate is so high, it’s possible that the interest accrual alone could be more than the cost of the move over the life of the loan. That said, taking out a personal loan may not be the best financing option right now – with the exception of those who qualify for the lowest rates and fees.
If you have a good to excellent credit score, a steady income, and a strong credit history, then it may be worthwhile to pre-qualify with a few lenders to see if the rates are competitive enough to secure a loan over the long term. make the term worthwhile. walk.
How to finance unexpected moving costs
There will always be bumps in the road and unexpected costs that arise, so the best thing you can do is be financially prepared for any emergencies that may arise.
For Jeremiah, some of these situations couldn’t have been more unexpected. “Unfortunately, there were unexpected costs associated with the theft of pre-shipments [or] “I have to send myself something twice,” he said. “Luckily I was able to argue with Amazon or Ikea, but some returns or disputes were missed if I bought too far in advance.”
A personal loan or credit card can be useful for financing emergency expenses, such as paying for stolen furniture, rather than trying to pay for new furniture out of pocket. However, never borrow more than you need and pay attention to the rates you are offered; you don’t want to have to pay off that new couch and television for years.
Before taking any financial action in the event of an emergency or unexpected event, it is always best to contact the moving company to see if they have a refund or replacement policy.
Pros and cons of using a loan to pay for a move
Like any other financing option, using a loan to cover the costs of a move has both its pros and cons. Whether this is the right choice for you depends on your immediate needs, your financial situation and whether your budget more than allows for future payments.
Plus points
- Peace of mind when emergencies occur
- Can help promote prudent spending
- Can be used for furnishings, moving costs and any non-discretionary costs associated with a road trip or longer flight
Cons
- Low interest rates are harder to get approved for
- He may take years to pay it off
- Must keep up with monthly payments to limit interest accrual and credit decline
When should you consider a personal loan to cover the costs of moving?
If you’ve exhausted all your other options and decided that a credit card may not be the best option for your finances, then it may be time to consider a personal loan.
However, this is only recommended to borrowers with good credit who meet all of the lender’s minimum application requirements. Otherwise, you could be offered sky-high interest rates and fees that could ultimately leave you in financial trouble.
This is how you find the best personal loan
Because there is no universally accepted “best” personal loan, compare lenders to find the best loan for you. Prequalify where possible and for as many lenders as possible to find out what the most competitive offer looks like for your credit situation.
What’s best for you also depends on whether the lender offers benefits and perks that will help you manage your balances. For example, it is common for banks to offer an interest rate reduction as a loyalty benefit to existing customers, while credit unions offer a similar benefit if they sign up for autopay.
