Where to get a no or low interest loan

amother

Azalea

Sun, Jan 09 2022, 1:50 pm

Perhaps another option, if you own a small business you might be able to get a small unsecured line of credit up to $250k. Generally the bank doesn’t allow using those funds directly for personal expenses but you can take a chunk as distribution as long as it’s reasonable for your business (you will have to read the loan contract details where it discusses distribution).

Last edited by amother on Mon, May 09 2022, 9:27 pm; edited 1 time in total

Amarante

Sun, Jan 09 2022, 5:01 pm

As others have posted, the cheapest interest would be a home interest loan or even a refinance. You would really have to run the numbers since both of these types of loans have front end costs. In effect you need to pay the same costs you would when you got the original loan including stuff like title insurance.

The reason why interest is lower is because the house is collateral and the lender is going to make sure that there is enough equity to cover the loan because they will foreclose if you don't pay.

If you are not doing a lot then a credit card might make sense but keep in mind that there is a trap since you will need to repay the loan in one year and if you don't follow the terms you will owe high interest for the year when you weren't paying interest. You really need to be disciplined and know that there is no problem in repaying the loan in a timely manner and according to the conditions or you will wind up paying a loan to the lender.

What kind of home improvements do you need? In many cases, it makes more sense to save for home improvements because by being forced to put aside money you will actually get a sense of whether you can really afford to repay the loan. At any rate, at the end of a period of time you will have managed to save up some money so any loan would be less.

Also keep in mind that any major home renovation project will go over budget. You need to have a contingency of at least 10% if not more realistically. Many people have had to deal with running out of money in the middle of a project because they took out a loan and it didn't cover the actual costs. Of course you can do a major remodel within a budget (more or less) but you have to be super disciplined and also not encounter any expensive surprises that need to be fixed like electrical or plumbing which often happens if you are renovating older kitchens and bathrooms.