Relocating can be challenging and stressful. It’s emotionally and financially daunting transitioning to a new place. According to the American Moving & Storage Association, the average cost to move within your state is $1,170, but moving from one state to another costs $5,630. Other stats go even higher.
If you are tight on money, moving can unveil several financial hoops to jump through. And most of the time, relocation expenses end up being higher than expected. But there’s help. From money-saving tips to personal loans, you have options. Let’s take a deep dive into some helpful strategies on how to finance a move.
Moving on a Budget: 5 Tips
Aside from retrieving a loan or credit card to help finance your move—which we’ll discuss later in the post—here are some ways to help you save when it comes to moving.
1) Host a Yard Sale
Selling your items can help you earn some extra cash for the move and ultimately help downsize and decrease shipping costs. Sift through all of your items at home, and determine which ones you don’t need or are okay with giving away. Make sure they are still in good condition. For any leftover items that you don’t sell, donate them to a charity and claim them as a tax deduction.
2) Plan the Time Wisely
Some moving services offer lower rates during the off-season or an off-peak day of the week. So be sure to do some research into this and plan your move accordingly.
3) Compare Rates
Consider all moving options such as a moving company, storage pod shipping services, and doing it yourself. Research and compare rates to see which would be the most economical option. If you decide to go with a moving company, use a flat-rate mover. That way, you won’t be pulled into a sudden price increase.
4) Save on Packing Materials
Don’t buy boxes. Instead, visit liquor stores and shops to see if they have any leftovers from their last shipment. Ask your neighbors and anyone who has recently moved to see if they may have boxes left.
5) Look Into Employer Relocation Packages
If you are moving due to a new job, ask your future employer if they offer a relocation package. Though the amount offered varies across companies, the package can alleviate your finances by covering at least a portion of your moving expenses.
It’s important to note that you should read carefully through your relocation package agreement. Employers often expect you to pay back your compensation if you leave the company too soon after making the move.
Getting a Loan to Move Out of State
Taking out a moving loan, in the form of a personal loan, can be a useful option to fund your move. There are two types of personal loans: unsecured loans and secured loans.
An unsecured personal loan doesn’t require collateral. Lenders may offer the loan to you based on several factors such as:
- Your credit score: Credit scores help lenders determine how risky a borrower you will be. The higher your credit score, the more qualified you will be for lower interest rates and higher loan amounts.
- Your income: Lenders use this information to help decipher whether you will be able to repay the loan.
- Your debt-to-income ratio: This ratio reflects the debt you currently owe to your monthly income. The lower your ratio, the better.
Repaying the unsecured loan involves fixed monthly payments and interest rates until it is paid off.
What if you have bad credit, or no credit? If you have a low credit score, a secured loan may be your only option. Unlike an unsecured loan, you will have to put up something as collateral that is of equal value to the loan amount you are seeking. Common examples of collateral are your home, car, or savings account.
Paying back a secured loan requires making fixed monthly payments over the lifespan of the loan. Sometimes lenders provide better terms and rates with a secured loan than an unsecured loan, so it’s well worth looking into both options before making a decision.
Are There Loans for Moving into an Apartment?
If you are moving into an apartment, there are a lot of upfront fees such as security deposits and first and last month’s rent. You can seek out a personal loan to help you cover these expenses.
Financing Your Move with a Credit Card
Navigating how to finance your move can involve using a credit card. This may be a good option, as long as you bear in mind an understanding of the limitations it carries.
The pros of using a credit card are as follows:
- Card issuers offer zero percent APR periods: Many credit card companies offer new customers with good credit an introductory zero percent APR. This means you won’t have to pay any interest as long as you make your payments before the end of the introductory period.
- You can save money and time: By not paying interest, your financing is free. Unlike with a personal loan where you start accruing interest right away, your zero interest rate card will contribute every one of your payments toward the principle and help you pay off your debt faster.
- It offers flexibility: If you have unexpected expenses that come up, you can change your payment amount. As long as you meet the minimum payment, you are good; you won’t be penalized with fees or interest within the zero percent APR time frame.
It’s crucial to keep in mind the cons that the credit card path entails in order to properly set yourself up for success:
- You must be in good credit standing: Gaining a zero percent APR card isn’t a walk in the park. To qualify, you must have a good credit score.
- The zero percent APR period doesn’t last: You can usually find offers for zero interest that go up to 18 months. After this period, you’ll be hit with interest rates that are often higher than personal loans.
Are There Moving Companies That Finance?
Moving companies generally do not allow you to finance a move through them. When they fulfill their moving services, you are required to pay your move in full. If you fail to pay your bill, it may be placed in collections, which will negatively affect your credit score. Some moving companies may offer a grace period, so if you decide to hire a moving company, be sure to look into their terms of service.
Be Mindful of All Options
When planning on how to finance your move, there’s a lot of research, reflection, and planning required. If you find that you are unable to finance your relocation, tread carefully through these options to find a path that best suits your needs. You want to set yourself up for success by understanding all the terms and how they might affect your financial standing.