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How to Finance a Roof

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A costly roof repair is a home improvement project most homeowners dread having to pay for. If your home requires a roof replacement, you may be wondering what financing options are available to help you with your project. Here, we'll discuss ways to pay for a new roof and what you should consider before financing through a lender.

Can you finance a new roof?

Yes, you can finance a new roof. In fact, there are several ways to borrow funds.

The most important thing to do before determining how you want to finance your roofing project is to shop around for the best loan. The research on personal loans show interest rates have continued to decline over time, yet a seemingly small difference in rates can still save you hundreds of dollars (or, in some cases, thousands of dollars).

For example, look at the difference in interest paid between these two loans:

Lender Loan amount Interest rate Monthly payment Total interest paid
Lender A $17,000 4.99% $274 $2,707
Lender B $17,000 6.99% $290 $3,862

TIP

Finding a roof loan

Of all the home improvement projects out there, roof replacement is among the hardest to get excited about. Still, when you need a new roof, you don't have many options. If you're not sure where to start, check out our best loans for home renovations page for a touch of inspiration.

If you have bad credit...

A damaged roof waits for no one. If your roof project is critical but you don't have the credit score for a loan from the lender of your choice, you do have options. Here are a few to consider.

  • A personal loan designed for borrowers with bad credit: There are some credible, professional lenders that offer bad or fair credit loans. Check out several lenders to learn which offers the lowest interest rate and most attractive repayment term.
  • A loan from your local bank or credit union: Even if your credit is far from perfect, your bank has access to your accounts and knows things like how often you make deposits and if you manage your bank account well. Your financial institution may be more forgiving than a lender you have no prior relationship with.
  • A secured loan: If you're having trouble qualifying for a regular loan, you can ask your preferred lender about getting a loan with collateral. When you use collateral to get a loan, the loan is called a "secured loan." Collateral can be anything of value that can be sold, like a home, vehicle, or even a savings account. It's important to remember, however, that if you miss loan payments, the lender can take your collateral as payment.

For more help, check out our guide: Best personal loans for bad credit

Best ways to finance a new roof

Here are some of your options for financing a new roof.

Personal loan

One of the best things about taking out a personal loan is that it can be used for just about anything. Plus, interest rates for personal loans are lower than rates for credit cards (as low as 8% for borrowers with good credit). How much you can get with a personal loan varies by lender, but generally ranges from $1,000 to $50,000.

Once your roofing contractor lets you know how much the roof installation is going to cost, it's time to browse personal loan lenders. Personal loans are available from banks, credit unions, and online lenders.

Find a few lenders you would like to compare. Then, fill out a loan application with each. Each lender will let you know if you qualify for a loan once they've reviewed your credit history (this won't affect your credit score). At this point, lenders will tell you:

  • What your interest rate will be
  • How much your monthly payment will be
  • If they add in charges like an origination fee

Using this information, you can decide which one is best for your roof replacement project. Make sure you compare the total cost of the loan (the APR) with each lender, rather than just looking at the interest rate.

If you have a strong credit score, you'll have your choice of lenders, so be picky about which lender you work with.

Use the calculator below to experiment with different loan amounts, loan terms, and monthly payments to find what works for you.

Financing a new roof: Personal loan calculator
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Roofing company financing

Contractors know that many customers don't have cash available to pay for a major roof repair. That's why some roofing services offer loans -- either directly or through a lending partner. While accepting a roofing loan on the spot may seem convenient, it pays to check your other options to make sure you're getting the best interest rate, loan term, and monthly payment possible. It's possible that a roofing loan will provide all the best loan features available, but you won't know if you don't shop around.

Home equity loan

Another roof financing option is to take out a home equity loan. A home equity loan is a type of secured loan, meaning your house acts as collateral. Secured loans typically carry low interest rates.

Like most standard loans, once the loan has been approved and loan documents have been signed, all the funds are disbursed to you. You repay the loan in regular monthly installments.

Home equity line of credit (HELOC)

As the name implies, a HELOC is a line of credit. A line of credit is similar to a credit card: The lender gives you a specific spending limit, and you can borrow as much or as little as you need up to that limit. In fact, you can take a lump sum, pay it back, and borrow it again for a set number of years (generally 10).

Like a home equity loan, a HELOC uses your home as collateral. HELOCs also carry low interest rates, and when you're taking on a home improvement project as large as a roof replacement, it makes sense to pay as little interest as possible.

Credit card with a 0% promotional rate

If you have an excellent credit score, there's a chance you qualify for a new 0% intro APR credit card. These cards typically give the cardholder 12 to 18 months of interest-free borrowing power.

For example, if the promotional rate on your card lasts for 18 months and your damaged roof costs $17,000 to replace, 18 equal payments of $945 would pay for the roof replacement in full -- without having to pay any interest.

Things to consider when financing a roof

Borrowing money to install a new roof is nothing like borrowing money to pay for a kitchen remodel or destination wedding -- you can't postpone the project until you have time to come up with the cash on your own. Instead, you have to make the best decision possible with the limited time you have. Here are some things to consider before making your roof financing decision:

  • Have I obtained bids from more than one licensed roofer so that I know I'm getting the best deal?
  • Am I confident enough in my ability to make the monthly payment to risk my home or other valuable asset by taking out a secured loan?
  • Do I have cash in my emergency fund to pay for part of the roofing project so I can finance less?

A new roof may not be as exciting as a dazzling new kitchen countertop or a luxurious hot tub, but it's hard to overrate the feeling of having a roof over your head. If your roof has seen better days, consider these options when it comes time for a replacement.

The Ascent's best personal loans

Looking for a personal loan but don’t know where to start? Our favorites offer quick approval and rock-bottom interest rates. Check out our list to find the best loan for you.

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