Best Pool Loans of August 2022

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What is a swimming pool credit?

A group loan is a personal loan that you receive in a lump sum and repay with interest in fixed monthly installments.

The pool is not a guarantee for this type of loan because it is not guaranteed, which means that no collateral is required. Instead, a lender uses information about you such as your credit, income, and other debts to decide if you qualify for a loan and what annual percentage rate to offer you.

Group loan amounts can range from $1,000 to $100,000, and are usually repaid over two to seven years. You can expect a rate between 6% and 36% on this loan, but the lowest rates often go to borrowers with good or excellent credit (690 FICO or higher).

Where to get a pool loan

Banks, credit unions and online lenders offer group loans, but each lender has their own borrower criteria and loan characteristics.

Banks: Existing bank customers can sometimes qualify for lower rates, larger loans, or special discounts. In general, banks prefer borrowers with good credit and solid income.

Credit unions: Borrowers with fair or bad credit (689 or less FICO) may be more likely to qualify for a credit union loan. These nonprofits can look beyond a low credit score and review your membership history to qualify.

Online lenders: Online lenders vary in their qualification requirements and loan features. Some bad credit lenders tailor their loans to borrowers with low scores or thin credit histories, for example. Others offer special features to well-qualified borrowers.

How to get a pool loan

  1. Get a pool estimate. Work with a contractor to agree on a cost estimate for the project before you start shopping for a loan. Once you know how much you need, you can choose a lender who offers that amount. Unlike credit cards and lines of credit, you can’t borrow once you get the loan.

  2. Pre-qualified. Online lenders and some banks and credit unions allow you to pre-qualify for a personal loan and view potential loan offers, including rates and monthly payments, without affecting your credit score.

  3. Compare lenders. If you receive similar bundled loan offers, compare not only rates and terms, but also other features of the loan. Some lenders can fund a loan in a day or two, while others offer extended repayment terms for larger home improvement projects.

  4. Gather the documents and apply. Gather the documents that most lenders need on an application — like W-2s, bank statements, and government-issued ID — to speed up the process. Most lenders can make an approval decision in a day or two and fund a loan within a week.

How to compare group loans

Amount of the loan: Depending on the type of pool you choose, you may need to find a lender that offers large personal loans. Many lenders cap loan amounts at $50,000, but some offer loans up to $100,000. Borrowers generally need strong credit and income to qualify for the larger group loans.

Affordability: Use the APR to compare the cost of several loan offers and other financing options. The option with the lowest APR is the cheapest and usually the best deal. Also check the monthly payments against your budget to make sure you can afford it.

Repayment term options: The repayment period determines the amount of the monthly payment. Longer-term group loans have lower monthly payments, but they cost more in total interest. Some lenders only offer three or five year repayment terms, but others are more flexible.

Possibility of solidarity loan: If you are sharing the house where you are installing the pool, you may be able to get a solidarity loan. Adding a co-borrower can improve your chances of qualifying, getting a bigger loan, or getting a lower rate. A co-borrower is also responsible for payments and has equal access to funds.

How much do swimming pools cost?

The cost of a swimming pool can vary greatly depending on the materials you use, whether in-ground or above-ground, and additional features.

An in-ground pool can cost between $20,000 and $100,000, according to HomeAdvisor, a website that connects homeowners and contractors. An above ground pool can cost between $800 and $15,000.

Pool loan rate

Source: Average rates are based on aggregated and anonymized offer data from users who prequalified in NerdWallet’s Lender Marketplace from January 1, 2022 through July 31, 2022. Rates are estimates only and are not specific to any lender. The lowest credit scores — typically below 500 FICO — are unlikely to qualify. The information in this table only applies to lenders with an APR of less than 36%.

Example of a bundled loan: A bundled loan of $60,000 repaid over six years at an APR of 12% would require monthly payments of $1,173. You would pay $24,456 in total interest on this loan.

Advantages and disadvantages of the pool loan

Advantages

  • No warranty. Unsecured pool loans don’t require collateral, which means the lender can’t take your property if you don’t repay. Instead, your credit score will drop.

  • Quick funding. Some lenders send loan funds the same or next day once you are approved. Others can fund a loan within a few business days.

  • Wide range of repayment terms. Repayment terms for grouped loans are generally between two and seven years. Some lenders, like LightStream and Navy Federal, offer longer repayment terms for home improvement projects.

The inconvenients

  • Rates can be high. Compared to home equity loans and lines of credit, which often have single-digit APRs, personal loans can have high rates.

  • Big monthly payments. Because you typically have less than 10 years to pay off a personal loan, monthly payments are often higher than a longer-term loan, such as a home equity line of credit.

Alternatives to group loans

Financing a swimming pool can be a multi-year commitment. Compare personal loans with other financing options to find the one that best suits your plans.

Home Equity Loans

A home equity loan is a second mortgage similar in structure to a personal loan. APRs and monthly payments are fixed. If you are comfortable using your home as collateral for the loan, home equity loans can be a low rate financing option.

Here’s what you can expect if you use a home equity loan to pay for a swimming pool:

  • Maximum loan amount: 85% of the value of your home, less what you owe on the mortgage.

  • Repayment period : Up to 15 years old.

Home equity lines of credit

A HELOC is an open line of credit that you can draw on as needed, making it ideal for projects that last a long time or have unexpected costs. HELOCs have variable interest rates, so your monthly payments can fluctuate. Like home equity loans, rates are often in the single digits, so this can be an inexpensive way to add a pool.

Here’s what you can expect if you use a HELOC to pay for a swimming pool:

  • Maximum loan amount: 85% of the value of your home, less what you owe on the mortgage.

  • Repayment period : A 10-year drawdown period followed by a 20-year repayment period is common.

Refinancing by collection

A cash refinance replaces your current mortgage with a new, larger loan. You “cash” the difference between your new loan and the amount owed, and use it to pay the pool. As this is a brand new mortgage, you will need to have your home appraised and pay closing costs, and the loan will have new terms. It’s only worth considering if current rates are lower than what you’re paying.

Here’s what you can expect if you use a cash-in refinance to pay for a pool:

  • Amount of the loan: 80% to 90% of the value of your home, less what you owe on the mortgage.

  • Repayment period : 15 years and 30 years are common mortgage repayment terms.

  • APR: Start between 4% and 5%.

Internal funding

Your contractor may offer you an in-house financing option, usually through a third-party lender. As this offer is specific to a new pool, loan amounts may be larger than a personal loan and repayment terms may be longer.

Compare this offer with other financing options to make sure you’re getting a good deal.

Loan amounts, repayment terms, and rates can vary by company, but here’s what to expect if you’re financing through a contractor:

  • Amount of the loan: Up to around $200,000.

  • Repayment period : Up to 20 years.

  • APR: Start between 3% and 5%.

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