Sometimes we need to move fast to start a new job or perhaps leave a bad situation and we don't always have ready cash to cover the costs.
If you need to move quickly and don't have the money, try a personal loan for moving expenses. Personal loans have many advantages when covering moving costs.
How Are Average Moving Costs Calculated?
Remember when you could fit all your belongings in a light truck that you could borrow? You could call up a couple of well-built pals and move for the cost of takeout and a couple of six-packs?
Sadly, you've probably ... er, moved on from that happy situation. Why else would you be reading about getting a moving loan? So how much should you expect to pay a professional moving company?
That will largely depend on five factors:
- The distance between your new and existing homes
- How much stuff you've got: Movers often base their charges on weight
- The season: Movers typically charge more during the peak summer months and less during winter
- How valuable your things are: Insurance rates can run as high as $8 per $1,000 covered
- Whether you want help packing: You're looking at a minimum of $30 per worker per hour and up to double that for a premium company in a high-wage city.
With so many variables, you'll want to get quotes from multiple reputable moving companies.
What Are Average Moving Costs?
Move.org provides some guideline figures for the likely cost to move in 2020. The variations are wide and reflect the difference between moving the contents of a small apartment and a larger house. And they exclude optional insurance and packing services. So here goes with the painful stuff:
- Local move: $550-$2,000
- Long-distance move: $2,000-$7,500
Be aware those top figures aren't ceilings. If you live in a mansion stuffed with heavy antiques - and want to move your extensive private library, grand piano and a pile of personal gym equipment, too - the sky's the limit.
You can find other estimates of costs on the internet. For example, back in 2018, the American Moving and Storage Association reckoned you'd pay an average of $2,300 to move an average house's contents locally and $4,300 for a long-distance trek. Of course, do-it-yourself moves are much more affordable.
What Is a Moving Loan?
A moving loan is an unsecured personal loan that you use to cover your moving expenses. And that includes everything from buying packing materials to renting a truck, and from hooking up the internet at your new home to paying a full-service moving company to do it all.
That's because personal loans are "any-purpose loans," so you can use the money for anything you like. And you might decide to borrow more to cover other things you may need in your new place - such as a couch, drapes or appliances.
Personal loans are unsecured loans. That just means they're not tied to a particular asset (a home for a mortgage or a car for an auto loan) that the lender can repossess if you don't repay the loan as agreed.
The only thing securing a personal loan is your promise to repay it. But, of course, that means you'll need a reasonable credit score to get a good one. And lenders will likely want to be sure you can afford the monthly payments.
Moving Loans: Pros
But why bother to get a personal loan when you could just pile the debt onto your credit cards? Well, there are four main reasons:
- Personal loans come with interest rates that are much lower (about 7% lower) than you'd pay on plastic.
- Loans are predictable and easy to budget. You pay equal installments over a set period. So you know on day one what you're in for and when you're due to have paid it off. No temptation to make minimum payments.
- Personal loans are quick and easy to find and get. It should normally take a matter of minutes to find a great deal, apply for a loan online and get approved.
- Personal loans are fast. Often, the funds are in your account on the same or next working day. And it rarely takes more than a week.
As importantly, you get to decide how long the loan should last. So you can pay a little each month and spread the payments over a long time - or you can choose a shorter payoff period with higher payments.
Moving Loans: Cons
There's really only one important drawback to personal loans. And that's their lack of flexibility.
Suppose one month you're hit with a huge, unexpected bill. You can reduce your outgoings on credit cards by simply making only the minimum payment. But payments on moving loans are fixed. You have to come up with the same sum every month. For nearly all borrowers nearly all the time, this isn't an issue. But it is something to bear in mind.
Of course, you could, in such circumstances, call your lender to beg for some forbearance. But, if you do, be sure to get an agreement that it won't result in black marks on your credit report that would impact your credit score.
One more potential drawback: You might be able to borrow more cheaply. Read "moving loan alternatives," below, for more on that.
When Should You Consider a Moving Loan?
Let's face it; you're usually better off if you can avoid borrowing. If you have savings, it can be less costly to use them to move. But don't leave yourself short at a time when unexpected relocation expenses are cropping up daily. And you should maintain the cushion of an emergency fund once you've moved in.
Typically, people get a moving loan when they...
- ... have to move quickly and unexpectedly, often for work or family reasons. Usually, they haven't had time either to save up or to come up with ways to reduce costs (see below).
- ... are moving a long way. Few have enough cash lying around to fund a long-distance move without leaving themselves exposed financially.
But we're all individuals, and we each have our own reasons for needing a loan.
How to Cut Your Moving Expenses
Unfortunately, moving expenses are rarely easily affordable. But you can reduce your cost to move in various ways:
- Relocate in winter: Moving companies usually charge less during their off season.
- Pack yourself: Don't pay others to pack your belongings. Do it yourself or throw a packing party with a few industrious friends.
- Scavenge your packing materials (boxes, cartons, paper ...). Ask friends on social media if they have any or source new materials cheaply online. Liquor stores are good for strong boxes.
- Only take what you really want or need. Especially for heavy objects, sell stuff online, give things to your friends, donate them to charities or throw them away. With a coast-to-coast move, it can be cheaper to buy a new set of gym weights at your new location than to ship them.
- Don't use a full-service moving company. Rent a moving truck or moving container. However, do understand the extra work you're taking on.
- Choose not to insure your possessions during the move - but only if you're a gambler who likes your odds.
Saving money on your cost to move usually involves finding the time and energy to do things yourself. Weigh your priorities.
Moving Loan Alternatives
If you're moving to benefit an existing or new employer, be sure to ask about relocation expenses. These are far from rare, especially with big companies. And nobody's likely to blame you for asking. If you're turned down, request an interest-free loan.
Personal loans may typically have much lower interest rates than credit cards. But they can't beat a 0% APR. And some cards offer just that, though only for an introductory period of usually 12, 15 or 18 months. Just be sure you can zero your balance before the high standard rate kicks in.
There's another possible disadvantage to these cards. Suppose you need $6,000 for a long-distance move. You get approved for one of these cards but your credit limit is $2,500. You're short $3,500. So you apply for a personal loan that size.
But your application for the card invariably gives your credit score a small hit. So you might not get as good a rate on your personal loan. And, if your score made your application borderline in the first place, you might not get approved at all.
Where to Find Personal Loans for Moving Expenses
As with pretty much all borrowing, moving loans come with wildly differing interest rates. That's partly due to different lenders tending to specialize in different borrower profiles. So one that's used to dealing with people with really high credit scores may offer someone with a fair one a worse deal than one that specializes in those with less dazzling credit - and vice versa.
All this means you should kiss as many frogs as you can before finding the lender prince that suits you best. By all means, start with your existing bank or credit union. But don't stop there. Compare personal loan offers online, as well. You may be surprised by all the different deals you qualify for. And picking the best could save you a bundle.