Building, or even remodeling a backyard pool, is no simple feat. Not only should you consider the amount of work required, but also the finances involved in building or renovating a pool. If you’re considering financing your pool, check out these five tips to help you get the best deals when taking up a pool loan.
1. Check your financing options.
You’ll be surprised to know that there are several options available when you’re financing a pool. That said, knowing all these options can work to your advantage as each option offers different sets of advantages, as well as disadvantages, that can help you make a better decision when taking up a pool loan.
Here are some of the most common options in financing a pool.
- Secured pool loan – A secured pool loan is a type of personal loan that requires the borrower to submit a collateral, typically in the same amount or higher than the loaned amount. A secured loan offers longer payment terms and lower interest rates, but may take longer to process and may entail more requirements compared to other pool financing options.
- Unsecured pool loan – Quite the opposite of secured pool loans. Unsecured pool loans will not require you to put up a collateral, but it will usually have shorter payment terms with higher interest rates. Because you’re not offering a collateral, your chances of getting approved may heavily depend on your credit standing. That said, it’s better to make sure you have a good credit score before applying for an unsecured pool loan because your approval depends on your creditworthiness.
- In-house pool loan – An in-house pool loan is a type of pool loan that is usually offered by your pool contractor. They can use their own funds or they can partner up with a lender or a financial institution to help offer in-house financial services to help their customers in financing a pool. That said, they may have different terms, interest rates, and requirements.
- Person to person loans – Also known as peer to peer lending, or P2P, is the type of loans you can get from friends, families, and certain individuals or a group of people, typically through online platforms that match lenders and borrowers. Given that they’re not your traditional financial institutions, they may have, likewise, unconventional terms which will typically be shorter and with higher interest rates than any of the aforementioned options above
Knowing what your options is key to making an informed decision when financing a pool.
2. Familiarize yourself with the terms.
Loan terms are the various payment schedules and amounts that both the lender and the borrower has agreed upon borrowing the money. Different options and financial institutions will have different loan terms which can work for you or against you.
Here’s an example.
When you take up a secured pool loan, you’re typically going to talk to bankers and credit union agents as well as representatives from other large financial institutions. Secured pool loans will usually have the longest terms which range anywhere from 10 to 15 years. For some, this means that they will have a longer time frame to deal with their loan while others would want to see their pool loan paid off. That said, unsecured pool loans can be your best option. You will find them offered by lenders and other smaller financial institutions and will typically have payment terms lasting anywhere from a year to 7 years. As we’ve mentioned above, this could mean that you can immediately pay off your loan or it can mean that you’ll be cramping to make payment in a short amount of time.
Make sure to check out the payment terms first to help you decide which would be the best option in financing a pool.
3. Familiarize yourself with the interest rates.
The interest rate on a pool loan is the amount you get charged on top of the borrowed amount or the principal loan. This is the charge for using the lender’s assets and is usually within an agreement by the borrower and the lender. As with the loan terms, different financing options will also present different interest rates.
Check this out.
Banks and financial institutions that collect collateral usually offer lower interest rates because the collateral helps secure the amount you’ve loaned. The collateral can be sold by the lender to cover the amount of the borrowed money. On the other hand, lenders who do not ask for collateral and grant your pool loan based solely on your credit score will typically ask for higher interest rates because the amount you loaned is not secured by any collateral. That said, they can ask a representative to step in and ask help from the local court should you default your payment.
4. Understand what requirements are needed.
Another tip to help you when applying for a pool loan when financing a pool is to ready your requirements. Generally you can ask for these pieces of information from bank representatives and agents from financial institutions. They may ask for different kinds of requirements but typically here will be some common documents and IDs you’ll want to present.
Here are a few.
- Driver’s license number
- Social security number
- Listed financial assets
- Listed collateral assets
- Listed source or sources of income
- Any registered business or businesses
- Current work information
Some lenders will even ask for your total monthly housing costs and other possible sources of income aside from the job you declared. It would be best to prepare these requirements beforehand or at least know what requirements you need beforehand.
5. You can finance a part of your pool’s total cost.
It’s quite common for many pool owners to finance only a part of their pool building or pool remodeling project. You don’t always have to loan for the total amount of the pool project especially if you already have cash on hand and you only feel that you will just be a few hundreds or grand short.
It’s quite common for many pool owners to pay for the majority of the cost of their pool project and finance the rest so you don’t get stuck with a large debt especially if you already prepared for it.