Swimming pools aren’t cheap. That’s why many pool owners opt to finance their pools by taking up a pool loan. Not only will a pool loan help you add money to the bucket, it also opens up a wide range of opportunities in personalization and customization allowing you to turn your backyard into a resort. But before you take the plunge, here are a few things you need to consider before applying for a pool loan.
Requirements for Qualification
Banks, lenders, credit unions, and financial institutions will want to see viable information to gauge a borrower’s creditworthiness. That said, it’s only common for these companies to ask for a slew of requirements before they approve your request for a pool loan. Different institutions may ask for different requirements; however, here are some of the most common pieces of information a lender would ask.
- Social Security Number
- Driver’s License Number
- Primary Source of Income
- Registered Business/Businesses
- Listed Assets
Some companies may also ask for your work status and a few character references; those that can vouch for your ability to make payment. That said, the list of requirements these companies will ask will contain records of your past and present financial track record and your current credit standing. Speaking of which, lenders will typically want to see a credit score of 650 and above.
If you can’t meet the required credit score, don’t be concerned. There are other places that will offer you a pool loan even if you have a bad credit score. But be warned that these lenders may offer a higher interest rate to compensate for your negative credit standing. That’s why finding the right pool financing option can play to your advantage. On that note…
Pool Financing Options
As we’ve briefly covered above, knowing your options when applying for a pool loan helps. At the time of writing, there are three types of pool loan one can choose from. Let’s start with one of the most popular ones…
1. In-House Pool Loan.
An in-house pool loan is a type of pool loan that’s offered by your pool contractor. When pool companies reach a certain level of experience and professional reputation, they tend to attract financial institutions to work with them. Hand in hand, your pool contractor and their partner lenders help pool owners finance swimming pool projects and even in building one. Taking up an in-house swimming pool loan has its advantages, here are a few.
- Faster loan approval
- Easier loan application
- Convenient pool financing
One of the appeals of in-house pool financing services is that it typically promises easier loan applications and faster approval rates. That’s because most of the documentation you need for a pool loan is often in the possession of your pool contractor. And because they work closely with their partners, they can easily vouch for you increasing your chances of landing that loan.
On the other hand, in-house pool loans can sometimes be restrictive. That’s because you’re going to be limited to the options your pool contractor’s financing partner has to offer.
2. Secure Pool Loan.
A secure pool loan is a type of a personal loan that uses a collateral to secure the loaned amount. Hence the term secured. Secured pool loans are typically offered by banks and other large financial institutions as they are in a better position to ask for and sell the secured collateral should you fail to adhere to the payment terms. Such proceeds of the collateral are then used to cover the loaned amount. On that note, the collateral asked by banks is typically of the same value, if not exceeds it.
Here are some reasons why you might want to go with a secured loan.
- Long payment terms
- Lower interest rates
Despite its collateral demand, a secured pool loan offers longer payment terms which makes it easier to plan your budget and still make payment. That said, the interest rates are likewise lower allowing you to bake it in your finances. Secured pool loans typically take anywhere from 10 to 15 years.
3. Unsecured Pool Loan.
Acting as the exact opposite of secured pool loans, an unsecured pool loan will not demand a collateral. This is ideal for people who do not want to put up properties for collateral. However, because there’s no collateral to secure the borrowed amount, unsecured pool loans will typically have higher interest rates and shorter payment terms…usually around 1 to 7 years. Moreover, a good credit standing is key to getting approved when you’re going for an unsecured loan.
These types of loans are typically offered by lending companies, credit unions, and even person-to-person lenders. While the lack of a collateral appeals to many pool owners, the brief payment terms and the increased interest rates can sometimes make it challenging to juggle your finances. That said, if you default from an unsecured pool loan, the lender can commission a collection agency to help collect the borrowed amount or take the matter to court.
If it’s your first time borrowing money from a lender, it’s important that you understand the loan terms. A loan term is the duration of which the borrowed amount is to be paid off. Both the lender and the borrower must agree on the payment terms and are usually made official by a signed documentation.
Loan terms can work for you or against you depending on your current financial situation. Longer loan terms means that you’ll have plenty of time to settle the payment while a shorter loan term means otherwise.
Interest rates refer to the amount charged to the borrower on top of the principal borrowed amount. It’s kind of like a fee you pay for for using the lender’s financial assets. Interest rates are typically spread out throughout the payment terms divided in the months and years the borrower has agreed to pay the loaned amount.
With these pieces of information at your disposal, you can make a better decision of taking a pool loan to help you build or remodel your dream pool.
Thinking of applying for a pool loan but can’t decide whether to or not to? Check out these tips you should consider when applying for a pool loan. And, if you need professional help with your pool, pool financing included, contact us today at Stanton Pools.