Personal Loans

Home Depot Financing: 6 Ways to Pay

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Whether you’re shopping for a home renovation or just to spruce up your garden, you have a variety of options for financing your Home Depot purchase. The store itself offers its branded Home Depot Consumer Credit Card and Project Loan. But you can tap traditional payment options, like a zero-interest credit and personal loan.

The branded from Citi is a good option for frequent shoppers who want to take advantage of special financing offers. For example, you may qualify for six months of deferred-interest financing on purchases of $299 or higher. If your balance is paid in full during the financing period, you won’t be charged interest. (If you don’t pay off your balance within the allotted period, you’ll be charged interest from the purchase date.)

Unlike your typical credit card, the cannot be used at other stores. However, during select promotional periods, cardholders can get up to 24 months of special financing. Year-round, cardholders benefit from rotating offers, like discounts on installed fencing, as well as enjoy 12 months of hassle-free returns (four times longer than for non-cardholders).

terms
APR
Rewards
  • N/A
Key features
Penalty fees
  • Late payment fees up to $40

Pros

 Special financing available year-round

 Up to 24 months of special financing during select promotions

 Rotating discounts, such as on fence installation

Cons

 High regular APR

 Short 6-month special financing period

 No credit card rewards like cash back

is a good option if you frequent the store and need special financing or want to access occasional discounts. The typical six-month financing period is relatively short, so you should be comfortable paying off your balance within that time frame to avoid deferred interest.

While the card has no annual fee, there are no rewards, either, and your card only works at Home Depot. The regular APR is high, so you should always aim to pay down your balance quickly to avoid high interest charges. If you’re drawn to shopping at competing outlets and rarely need special financing, the card may not be worthwhile.

Home Depot Project Loan

Home Depot’s Project Loan is intended to be used to finance major home improvements. It functions like a line of credit, with a limit of up to $55,000, and comes with a branded card that can only be used at Home Depot. If you are approved for a Project Loan, you’ll have six months to buy tools and materials at Home Depot in store or online. Afterward, you’ll pay down your balance in fixed installments over 66 to 114 months.

Different monthly payment schedules come with different terms. Project Loans don’t have any prepayment penalties, so you can make additional payments to save on interest and pay in full whenever you prefer. The APR, which can be as low as 7.42%, can make this financing option cheaper than the Consumer Credit Card if you can’t benefit from the card’s six-month special financing offer.

Home Depot Project Loan terms
APR
  • 7.42%-19.96% (fixed)*
Borrowing limits
  • Up to $55,000
Repayment period
  • 66-114 months
Loan terms
  • 66 monthly payments at 7.42%* APR;
  • 78 monthly payments at 12.86%* APR;
  • 90 monthly payments at 16.24%* APR; or
  • 114 monthly payments at 19.96%* APR
Monthly payment requirements
  • Maximum $20 per $1,000 spent
Annual fee
  • $0

*APR accurate as of December 2, 2020

Pros

 High borrowing limits

 Up to 114 months to pay back your debt

 Relatively low APR when you choose a shorter repayment period

Cons

 Few special offers

 Can only be used for Home Depot purchases

If you have a large home improvement project and will make the majority of your purchases at Home Depot, the Home Depot Project Loan can be a great financing option depending on your credit. With a high borrowing limit and relatively low maximum APR, the Project Loan could be an affordable financing option, especially compared with the Consumer Credit Card.

Unlike your typical personal line of credit, however, the Home Depot Project Loan only allows you to finance purchases from the retailer. The six-month spending term can also hinder you if the project takes longer than expected to complete. Make sure ahead of time that Home Depot has everything you need before starting work on the project, and look to pay off the loan as quickly as possible to avoid hefty interest charges.

0% interest credit card

If you have strong credit and would prefer a flexible credit card to make purchases for your home improvement project, a credit card with a 0% introductory APR may be a better choice over any of Home Depot’s branded products.

Credit card companies commonly offer new cardholders an introductory 0% APR for a select period, usually 15 months or longer. During this time, you won’t be charged or pay interest on purchases you make. Once the introductory period ends, your outstanding balance will accrue interest based on the regular APR as normal. The typical APR across all new card offers ranges from 15.68% to 22.89%, according to LendingTree data.

Savvy shoppers may benefit from reward programs that offer cash back or miles for everyday purchases. Such rewards can effectively make your purchases cheaper, especially if your particular card offers a higher rewards rate at purchases at stores like Home Depot.

Pros

 Can use your credit card wherever it’s accepted

 Low introductory APR

 Potentially lower regular APR than the Home Depot Consumer Credit Card

Cons

 Regular APR can be high

 Need strong credit to qualify

 Introductory APR only for new cardholders

While the Home Depot credit card may be convenient for shoppers at checkout stands, a zero-interest credit card can be a far more affordable option, if you qualify. Not only can the regular APR on this type of credit card be lower than with the Consumer Credit Card, but you could also benefit from a 0% introductory APR that lasts a year or longer and doesn’t charge deferred interest if you fail to pay off the balance in full.

Your card can also be used at a large variety of stores, allowing you to comparison shop for your home improvement project. However, these credit cards require good credit to qualify, and the introductory APR offers are reserved for new cardholders. Further, the regular APR can be higher than with the Project Loan and other loan products.

See credit card offers

Personal loan

Personal loans are fixed-rate installment loans that can be used for just about anything, including home improvement projects. They can be unsecured or secured, and offer borrowing limits as low as $1,000 and as high as $50,000 or more.

Since unsecured personal loans don’t require collateral, your credit score is heavily weighed to determine loan eligibility and your rate. The average APR on an unsecured personal loan can be as low as 7.63%. Although there are bad credit personal loans, these can have extremely high rates that make them much less affordable compared to the other options discussed here.

Secured personal loans typically have lower rates than unsecured personal loans. They require collateral like a car or other assets to back the loan, however. If you have a lower credit score, searching for a secured loan can be a viable path to funding your home improvement project.

Pros

 Low APRs depending on the lender and your credit

 Flexible borrowing amounts from $1,000-$50,000+

 Funds can be used anywhere and for just about anything

Cons

 Potentially high APR if you have fair or poor credit

 To borrow more, you’ll need to take out another loan

 Loan may come with an origination fee

A personal loan can be a good option if you know how much money you need to complete your home improvement project and have strong credit. Although you’ll start paying interest on the borrowed amount from the start, you could nab a much lower APR than you’d get once a credit card’s introductory period or special financing offer expires. The APR can also be much lower than with the Project Loan depending on your finances.

If your credit score is low, interest rates can be extremely high. Be mindful of additional fees, as well. While certain borrowers may be able to take advantage of no-fee personal loan lenders, origination fees can range from 1%-8%.

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Home equity loan

A home equity loan is a secured loan that taps the equity in your home and uses your home as collateral. This type of loan can pay for major expenses like a kitchen remodel. Generally, you can access up to 85% of the value of your home, also known as your loan-to-value ratio (LTV). A HEL calculator like the one below can give you an idea of how much you can borrow.

Similar to a personal loan, borrowers receive money in a lump-sum payment. After paying closing costs (usually 2% to 5% of the loan amount), you’re then responsible for repaying the principal and interest over a set period of time, usually five to 15 years.

Because a home equity loan is backed by your home, you’ll benefit from low, fixed rates and can typically borrow higher amounts. However, because your house is collateral, you could lose your property if you fall behind on payments.

Pros

 Low interest rates when compared with a credit card or personal loan

 Potentially high borrowing limit

 Long repayment period and lower fees than other financing options

Cons

 Nonpayment could lead to home foreclosure

 Need at least 680 credit score

 Loan is backed by your home

Because home equity loans tap into the value of your home and are backed by your home, they often come with lower interest rates and higher borrowing limits than other financing options you might use for your Home Depot purchase. Available repayment periods are also long, giving you plenty of time to pay down your debt.

However, using your home as collateral can be risky, especially if your finances are shaky. You’ll also need at least decent credit to clinch a home equity loan.

Explore home equity loan offers

Home equity line of credit

Like a home equity loan, a HELOC uses your home as collateral. It differs from a home equity loan in that it’s more like a credit card, except you have a specific draw period when you make charges. The draw period typically lasts around 10 years. Once your HELOC enters repayment, you’ll repay your outstanding debt on a schedule.

The borrowing limit is usually up to 85% of the value of your home minus the amount you still owe. Lenders also typically check your credit score and history, employment background, income and monthly debts to determine eligibility.

A HELOC usually comes with a variable interest rate that could rise or fall over the life of the loan. This makes your payments less predictable. Some banks will offer an introductory phase for a HELOC with a low teaser interest rate, but the amount will eventually increase after six months or more.

Pros

 Similar flexibility to a credit card

 Lower interest rate than credit card

 Can borrow large amounts on an as-needed basis

Cons

 Variable rate makes repayment less predictable

 Set draw period when you can make charges

 A high credit score (at least 740) recommended to qualify for your best rates

 Secured by your home

A HELOC works much like a credit card, offering you flexibility when you need to make multiple trips to Home Depot or other stores. Because your line of credit is backed by your home, you can access lower interest rates than you would get on a standard credit card.

Your interest rate is variable, however, meaning you won’t know how your payments might fluctuate in the future. To get a competitive rate, you’ll need strong credit. As with a home equity loan, if you fall behind during repayment, you risk losing your home.

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