Finance Your New Fence With a Personal Loan
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There’s a reason why white picket fences are synonymous with the American dream: They can keep pets and children safe at home while keeping intruders out. Fences come at a price, though, so you might need some form of fence installation financing.
The typical fence installation costs between $1,641 and $3,972, according to HomeAdvisor, a home improvement marketplace. While you might be able to budget for this on your own, you can utilize plenty of financing options. Read on to find the best fence financing option for you.
5 ways to finance a fence installation project
- Seek financing options at retailers
- Open a personal loan for home improvement
- Consider a HELOC or home equity loan
- Charge a rewards credit card
- Budget months in advance and pay cash
1. Seek financing options at retailers
You might be able to secure a low interest rate ー or pay no interest at all ー if you work through a home improvement retailer. For example, Lowe’s Home Improvement® has two fence financing promotion deals with the Lowe's Advantage Card®, which is offered through Synchrony Bank®:
- 6-month special financing: If you pay off your project of $299 or more within six months, you’ll pay no interest using your Lowe's Advantage Card. But if you haven’t paid off the amount within that promotional time frame, then interest will be charged to your account dating back to the purchase date.
- 84-month fixed pay financing: For projects that cost $2,000 or more, you can get 84 fixed monthly payments at a reduced 7.99% APR using your Lowe's Advantage Card. Standard APR is 26.99%.
Similarly, Home Depot® also offers fence financing through the Home Depot Consumer Credit Card® (offered through Citibank®) and the Project Loan® issued by GreenSky®, a loan program:
- 6-month special financing: If you pay off your project of $299 or more within six months, you’ll pay no interest using your Home Depot Consumer Credit Card. But if you haven’t paid off the amount within that promotional time frame, then interest will be charged to your account dating back to the purchase date.
- 84-month fixed pay financing: For projects that cost up to $55,000, you can get 84 fixed monthly payments at a reduced 7.99% APR with a Home Depot Project Loan.
For both Lowe’s and Home Depot, financing is subject to credit approval. You could also search for local fence companies that have financing options you can explore.
2. Open a personal loan for home improvement
Another way to finance your fence installation project is to take out a personal loan. These types of loans are unsecured, which means that they don’t require collateral. Instead, lenders lean more heavily on your credit profile to determine eligibility. See the table below to learn more about using a personal loan to build a fence.
|Using a personal loan for home improvement|
|Personal loans are unsecured, so you don’t have to put up any collateral. With a secured loan, like a home equity loan, you risk losing your collateral if you fail to make payments.||Interest rates can be high. The average APR for personal loans taken out in Q1 2019 was 33.38%. Borrowers with scores over 720 saw an average APR of 7.27% while subprime borrowers saw an average APR of 85.92%.|
|You could improve your credit score, because issuers like FICO like to see that borrowers have a mix of credit types.||You’ll have a hard time getting a favorable interest rate or even qualifying if you haven’t already established good credit.|
|You can use a personal loan to pay for virtually any type of home improvement. You can take out financing to build a fence, plus you could pay for any other home improvement project you have in mind.||Interest is added on top of your return on investment, so it might not be worthwhile to complete the project if you’re looking to maximize value added to your home.|
|You’ll pay off the loan in equal monthly installments, so you’ll always know how much is due.||Other financing options may offer better interest rates. These may include a store credit card with special financing or a secured loan like a home equity loan.|
3. Consider a HELOC or home equity loan
Homeowners, listen up: if you have equity in your home, then you might be able to borrow money against your home’s value. Your equity is determined using this formula:
Value of your home – liens against it = Home equity
Let’s say your home is worth $231,000, which is the median home value in the U.S. according to online real estate database Zillow, and you have $137,000 left on your mortgage and no other liens. Here’s your equity:
$231,000 – $137,000 = $94,000
To take advantage of your equity, you could use a home equity loan or a home equity line of credit, or HELOC. Keep in mind that you won’t be able to access all of your equity, but rather up to 85% of it. How much you’re approved for is also dependent on creditworthiness.
Since you’re putting your home up as collateral, you’ll generally see lower interest rates than you would with an unsecured personal loan or a credit card. The finances you’re borrowing are secured against something you own, so you also might have an easier time qualifying for a home equity loan than a personal loan if you need fence financing with bad credit. (On the flipside, if you fail to make payments, you could lose your home.)
Plus, when you use your home equity to borrow the money, your interest payments will be tax deductible – a unique advantage to this financing option.
|Home equity loan vs. home equity line of credit|
|Home equity loan||HELOC|
|What it is||A loan that uses your home equity as collateral||A line of credit that uses your home equity as collateral|
|Interest rates||Interest rates are fixed, with a 5.76% average interest rate for 15-year fixed-rate home equity loans, according to ValuePenguin, a LendingTree subsidiary||Interest rates can be fixed or variable. 5.51% average interest rate for variable-rate HELOCs. You’ll only pay interest on the funds that you withdraw|
|How funds are paid out||You’ll get a lump sum to work on your project||You can withdraw funds on an as-needed basis over a set period|
4. Charge a rewards credit card
Responsible credit card users might consider putting their accounts to good work as a way of earning rewards points, travel miles or cash back. But interest rates may be higher than what you’d pay if you use a personal loan for home improvement.
The average APR for all new credit card offers in October 2019 was 20.60%, according to data from CompareCards, which is owned by LendingTree. Those with strong credit may get a better interest rate through a personal loan. So, this option is best employed when you have a card with an introductory 0% APR period.
Much like store financing offered by some retailers, you would have a grace period in which you aren’t charged interest. Some cards offer introductory APR periods from 12 to 21 months. If you don’t pay off your balance during that period, though, you’ll be charged back interest. So if you choose this option to finance your fence installation project, make sure you can pay back the balance in full before that promotion ends.
5. Budget months in advance and pay cash
Finance your fence the old-fashioned way by creating a budget and squirreling away money for your project. Follow these steps:
- Get an estimate for your fence installation project. Home improvement stores may be able to give you a price quote on materials and installation services.
- Find out how much room you have for savings in your budget. Determine if you can put away $100, $250 or even $500 per month toward your home improvement budget.
- Map out a timeline for your home improvement project. If you want to begin fence installation in six months and your project will cost $1,800, then you should put away $300 per month.
By using the steps above, you can adjust your expectations accordingly. Say you want to get your fence ready for next summer, but you can’t afford to put away $300 per month with the holidays approaching. Maybe you could settle for cheaper materials, or you could settle by pushing your project back a few months.
Pitfalls to avoid when funding your project
You might be tempted to opt for a bigger fence built with top-tier materials because you can put off payments with financing. But you shouldn’t build outside of your budget just because you have financing. After all, when you finance a home improvement project, you’re still spending your money, not the bank’s or lender’s.
Additionally, never take out debt you can’t repay. If you get in over your head with a bill you can’t pay, you could run your credit score into the ground. Don’t give debt collectors a reason to come knocking. If you can’t afford to build a fence right now, then determine how you can rearrange your finances and make room in your budget.