How to Finance a Move

Moving can be expensive. Just how expensive depends on how far you're moving and how much stuff you have -- the heavier the load, the more expensive the move. According to HomeAdvisor, a short move will run anywhere from $700 to $5,000, while a long-distance move can cost $4,000 to $10,000 (or more). If you have no choice but to move before you have the cash to pay for it, relocation loans are an option.

What is a relocation loan?

A relocation loan is a loan that helps you pay moving expenses. It usually takes the form of a fixed-rate personal loan, which you pay back in monthly installments. Whether you're moving across town or out of state, a relocation loan covers the costs associated with getting your belongings from point A to point B.

How do relocation loans work?

Relocation loans are like other unsecured personal loans. If you have a high credit score and healthy credit history, you will be eligible for the lowest interest rates and best repayment terms. You can still get a personal loan with poor credit, but your interest rate will be higher.

Relocation loans are distributed in a lump sum, and you use the money to pay for various moving costs, including renting a truck, paying for help to load the truck, the purchase of packing materials, and gasoline (if you are driving the truck yourself).

Financing options for moving

Here are several options for financing a move:

Personal loans

The best personal loans offer low interest rates and terms you can mold to fit your budget. Be aware of the minimum loan amounts if you only need a relatively small amount of money. And for loans of any size, check for any origination fees or other charges.

One of the easiest ways to finance a move is to check with a bank or credit union you deal with regularly. It's possible that financing a move with it will be less expensive since it already has a professional history with you. For example, it may offer you a discounted interest rate because you're an established customer. Never underestimate the value of personal connections.

In addition to banks and credit unions, personal loans from online lenders can be intensely competitive. You'll find low APRs and a range of loan amounts and loan terms, so shop around to find one that works for you.

You can use the personal loan calculator below to determine the monthly payments for different personal loans.

Credit cards

If your moving company accepts credit cards, it can be tempting to pay for your move with a card. But most cards have a high interest rate. Financing a move with a credit card can end up costing hundreds of dollars in interest charges alone.

To avoid paying interest, find out if you qualify for a credit card with a 0% introductory rate. This will allow you to finance your move interest-free (as long as you pay off the card before the intro period ends).

Let's say the introductory period on the card you sign up for is 18 months, and you spend $2,500. You'd need to make 18 equal payments of $139 per month to pay back the cost of the move. Again, be sure you can repay the balance in its entirety before the intro period expires. Once it's over, the interest rate on the card shoots up to its standard rate.

How to finance a move

Moving can be stressful enough, even when you're not in the market for a relocation loan. Here are a few ways you can make it easier to finance a move:

Check your credit score: Financing a move is less expensive for people with strong credit. If your credit score is less than stellar, don't stress. There are a few moves you can make to improve your credit score. These include paying down debt or asking for an increase in your credit limit. It's also worth checking your credit report for mistakes that could be pulling your score down.

Work your budget: Take a look at your monthly budget to determine how much you can easily repay each month. If you can only afford to make small monthly payments, look for a longer loan term or borrow a smaller amount. Extending your loan term will mean you pay more interest overall, but it can keep monthly payments manageable. Missing a monthly payment can damage your credit score -- so it's important to stay within your budget.

Reduce your costs: Before you consider any type of financing, work out how much your move is going to cost. You may be able to reduce the cost by doing things like packing yourself, donating some of your belongings to charity so that your move will weigh less, or shopping around for the right mover.

Rate shop: With so many lenders out there, it makes sense to get quotes from three or four of them to find the right loan to finance your move. You can get quotes for a lot of personal loans with only a soft credit check, which does not hurt your credit score. And even if several lenders need to do a hard pull, it will only count as a single credit inquiry if you do your rate shopping within a two-week period.

Alternatives to financing your move

Employer assistance: If your relocation is due to a new job (or job transfer), ask your employer to finance it. If the employer is hesitant, offer to trade something -- like a week of paid vacation -- to cover the cost. Even if your new boss doesn't want to cover the whole move, they might be willing to finance a portion.

Make money: Sell all the extra belongings you've been holding on to and use the money to finance the move. As a rule, if you haven't used an item in six months or more, you probably won't miss it. Plus, the move will be cheaper if you're moving less stuff.

Use your savings: If you have money put away in a savings account, now might be a good time to tap into it. You can always rebuild your savings once you are settled in your new home.

If you are renting and your lease is almost up, figure out how long it will take you to save enough to pay for a move and ask your landlord for an extension. If you have been a good tenant, your landlord should be happy to comply. If your move is simply a matter of following your heart or finding greener pastures, put it off until you can pay cash. One day, those greener pastures will feel even sweeter because you did not bring extra debt along.

With new people to meet and new places to see, moving can be one of the most exciting things you do. Make life as easy as possible on yourself by financing wisely.