How to Get a Pool Loan

Adding a pool to your yard can both increase the value of your home and provide a fun recreation option. However, it can also be expensive.

According to HomeGuide, the average cost of installing an in-ground pool can range from $25,000 to $100,000, but many people can’t afford to pay that in cash. So, if you’re planning to install a pool in your yard and need financing, consider a pool loan or other loan options instead

Pool Financing Options

You have several different financing options to help you pay for your pool installation. The right type of financing for you will depend on a variety of factors, including how much you need to borrow, whether you have home equity, your credit score, and more.

Here are some pool financing options to consider:

• Personal loan: A personal loan is an installment loan with a fixed interest rate that you repay over several years. Personal loans are usually unsecured, meaning you don’t need collateral, and are available in amounts as high as $100,000, depending on your lender. However, you’ll usually need a good or excellent credit score to get a competitive interest rate.
• Home equity loan: A home equity loan uses your home equity as collateral and is often referred to as a second mortgage. It is structured like a personal loan since they are both installment loans that usually have fixed interest rates.
• Home equity line of credit (HELOC): A HELOC also uses your home equity to secure a line of credit versus a lump sum of money. A HELOC operates like a credit card where you have a revolving credit line with a variable interest rate, and you can borrow from it several times.
• Cash-out refinance: A cash-out refinance also uses your home to secure the loan. However, instead of taking out another loan on top of your original mortgage, a cash-out refinance replaces your current mortgage. However, your entire mortgage will be at the new interest rate. Carefully consider if this is a good financial solution if you have a mortgage with a low interest rate.
• Manufacturer financing: Some pool manufacturers offer financing to help you pay for your pool rather than using an outside lender. The terms and interest rates of each loan will depend on the company, but you can generally expect a high loan amount with a fixed interest rate.
• Credit card: In most cases, a credit card isn’t an ideal financing solution for a pool installation. Credit cards have considerably higher interest rates than the other financing methods. An exception could be if you can qualify for a 0% introductory APR and you can pay off the full balance within that period. In that case, you can essentially get a loan for free.

How to Get a Pool Loan

If you’re considering installing a pool in your yard, you can use this step-by-step guide to help you find the right personal loan to finance it:

1. Check your finances: Before applying for a loan of any kind, check your credit score and credit report for red flags that would prevent you from qualifying for a loan. Additionally, review your budget and consider whether it is the right time to add another debt payment.
2. Decide how much you borrow: Talk with a contractor or pool manufacturer to get a quote before you start shopping for loans. That way, you can get an idea of how much you need to borrow so you can be more prepared with your loan application.
3. Consider pre-qualifying: Many personal loan lenders give you the option of pre-qualifying for a loan. Pre-qualification allows you to see whether you will likely qualify and what interest rate you may qualify for without it having a negative impact on your credit. Pre-qualifying can help you narrow down your list of lenders to those that will offer the best rates.
4. Complete your application: Once you’ve decided on a lender, you can move forward with the official application. You’ll need to provide verification of your employment and income and allow the lender to do a hard credit inquiry. 
5. Get approved: Depending on your credit score and the information on your loan application, your loan may be approved immediately, or the lender may need additional time to consider your application. Many personal loan lenders offer fast funding, meaning you could have the loan funds in your bank account within just a few days.

When Is It a Good Idea to Get a Pool Loan?

A pool is a major purchase that many homeowners can’t afford to pay for out of pocket. As a result, a loan may be necessary to finance this project. However, a pool loan isn’t necessarily good for everyone.

First, a pool loan may be a good idea if you have a strong financial foundation. In other words, a loan may be ideal if you can easily afford the monthly payments and you have emergency savings in case of job loss, necessary repairs, or any other unplanned expense.

On the other hand, if you feel the loan payments would stretch your budget or if you don’t have a financial safety net, you may want to postpone your pool installation and save money. Also, consider whether your credit is strong enough to apply for a large loan. A good or excellent credit score will help you qualify for the best interest and save you money in the long run.

Choosing a Pool Loan

When you start shopping for a pool loan, you’ll find many options. If you’re using a personal loan, the first choice you’ll have to make is which type of lender to use. Traditional banks, credit unions, and online banks all offer personal loans. However, they may differ in terms of their loan amounts, interest rates, repayment terms, fees, and more.

As you compare lenders and types of lenders, here are some important factors to consider:

• Interest rate: The interest rate is your cost to borrow the funds. Your interest rate will depend both on your credit history and your lender’s terms. A higher interest rate can add thousands of dollars to your loan costs, so it’s important to shop around for the best deal.
• Fees: Many lenders charge an origination fee on personal loans, which is often based on a percentage of your loan amount. It usually ranges from 1% to 10%. However, not all lenders charge this fee. Other fees may include late fees and prepayment penalties, though these aren’t common.
• Loan amounts: Personal loan amounts can often be as high as $100,000, but each lender has its own loan limits. Some lenders may only offer loans as high as $30,000 or $40,000. Narrow down your list to lenders that offer loans in the amount you need for your pool installation.
• Repayment terms: Personal loan repayment terms typically range from one year to seven years, depending on your lender. Consider your monthly budget when choosing a repayment term since choosing a shorter or longer term will have a major impact on your payment amount.
• Customer service and reputation: As you choose a lender that offers the loan you need, consider the company itself. You want to work with a company that has a good reputation in the industry and that will be responsive if you have questions or need assistance with your loan.

Applying for a Pool Loan

The process for applying for a personal loan will vary depending on the type of lender you work with. If you opt for a traditional bank or credit union, you may need to apply at a local branch or work with a loan agent to complete your application.

If you choose an online lender for your personal loan, the application process can go quite smoothly. You can complete your application online and, in most cases, relatively quickly.

Keep in mind that the more information you provide in your initial application, the more quickly your application will be processed. If you fail to provide proof of your income or employment, the lender may need additional time to request that information and process your application.

What’s Negotiable

While you can’t necessarily negotiate any elements of your loan, you can increase or decrease the amount of your monthly payment by adjusting your repayment term.

With a longer repayment term, you will have lower monthly payments. While this may seem like the more attractive option at face value, you’ll end up paying more in interest in the long run.

The shorter your repayment term, the higher your monthly payment will be. Because you pay your loan off more quickly with a shorter term, you’ll pay less in interest over your loan term. You may potentially get a lower interest rate with a shorter term.

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