An unsecured home improvement loan is a home improvement loan with no collateral involved. The borrower doesn’t have to put their property at risk in order to take out the loan. In contrast, a secured home improvement loan requires some collateral, such as an auto title, real estate, stocks or a certificate of deposit. The lender can take ownership of the collateral if the borrower is unable to pay back the loan.
Because it carries more risk for the lender, an unsecured home improvement loan is harder to get than a secured one. While you should be able to get a secured loan with nearly any credit score, an unsecured home improvement loan will typically require a credit score of at least 660. Some lenders will consider applicants with lower credit scores, though.
Before you apply for an unsecured home improvement loan, you should pre-qualify to check your chances of approval and see an estimate of the rates you’d get if approved. WalletHub’s free pre-qualification tool can help you check your status with various lenders.
Once you apply for an unsecured home improvement loan and get approved, you can use the funds for any home improvement expense. That could include remodeling a basement or bathroom, putting on a roof, or building a deck, to name a few things.
Best Unsecured Home Improvement Loan Offer
The best unsecured home improvement loan comes from LightStream, where you can borrow $5,000 to $100,000 for 12 to 144 months. The interest rates are quite low, too, only ranging from 4.99% to 15.79%. There’s no origination fee, either.
Alternatives to an Unsecured Home Improvement Loan
Other ways to get money for home improvements include using a home equity loan or home equity line of credit (HELOC). However, these options are both secured – they use your house as collateral. So if you find yourself unable to make payments on a home equity loan or HELOC, the lender could eventually foreclose on your house.
If your expenses are on the smaller side, you might also consider charging them to a credit card with a 0% introductory APR. But these 0% APRs only last for 6 - 24 months, after which any remaining balance is subject to the card’s high regular APR.
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