as From installing a new roof to remodeling a bathroom, home improvement projects are bound to come up when you’re a homeowner.
According to HomeAdvisor’s 2017 True Cost Survey, the average homeowner spent $5,157 on renovation projects in the past 12 months.
If you don’t have home improvement money set aside in savings, you might take out a loan to cover costs. But before you do, take time to estimate your full cost of borrowing. Our personal loan calculator does the legwork for you so you can make the best choice for your finances.
Here’s how to make the most of this home improvement loan payment calculator so you can turn your fixer-upper into your dream home.
1. Estimate your monthly payments
By using our personal loan calculator above, you can estimate your monthly payments on a loan.
Let’s say you’re deciding between borrowing $2,000 and $5,000 on a three-year repayment term. For the sake of comparison, we’ll say both loans come with an interest rate of 8.00%.
To pay off $2,000 over three years, you’ll be making monthly payments of $63. But to repay a $5,000 loan, you’d have a monthly bill of $157. Depending on your budget, that higher monthly payment might be impossible for you to meet.
By plugging all the numbers into our personal loan calculator, you can make sure you don’t take on a debt that would be too burdensome to pay back. Even though it’s tempting to install granite countertops and stainless steel appliances, for example, you might decide expensive improvements aren’t worth years of high monthly payments.
2. Compare interest rates
Not only does the personal loan calculator estimate your monthly payments, but it also helps you figure out the long-term costs of borrowing by comparing loan interest rates.
To figure out what kind of home improvement loan interest rates you’re looking at, you first have to apply for instant rate quotes with home improvement loan lenders. SoFi and Upstart, for example, let you see preliminary offers before submitting an application.
SoFi’s average home improvement loan rates fall between 5.49% – 14.24%. Meanwhile, Upstart’s home improvement loan rates range from 7.39% – 29.99%.
Ultimately, the rate you get depends on your creditworthiness. Checking your rate won’t affect your credit score so long as it’s a soft credit check. Afterward, you can use the personal loan calculator to compare your offers.
For example, let’s say you’re planning to take out a $4,000 home improvement loan and pay it off over five years. At a 10.00% interest rate, you’d pay $1,099 in interest over the length of your term. But at an 8.00% rate, you’d pay $866.
Just a 2% change in your rate can mean the difference of $233. Instead of wasting that money on interest, you could use it to put the final touches on your Pinterest-worthy bedroom.
That’s why it’s so important to shop around for the best home improvement loan terms before choosing a lender.
3. Consider various home improvement loan terms for repayment
Besides interest rates, the personal loan calculator also helps you compare different home improvement loan terms for repayment.
Most lenders offer repayment terms between three and seven years. If you choose a short term, you’ll pay less interest and be out of debt faster. That said, you’ll have higher monthly payments.
On the flip side, a longer repayment term means you’ll pay more interest overall, but your monthly payments will be more manageable.
Let’s again consider that $4,000 home improvement loan at an 8.00% interest rate. This chart shows your monthly payments and total interest with repayment terms between three and seven years.
|Repayment term||Estimated monthly payment||Total interest you’ll pay|
As you add time to your repayment term, your monthly payment goes down. At the same time, the amount you pay on interest increases.
By crunching the numbers with our personal loan calculator, you can find a repayment term that strikes the best balance for your budget.
4. Don’t forget about extra fees
Although this personal loan calculator gives you an overview of your loan costs, it doesn’t take extra fees into account. Some lenders, for example, charge an origination fee upon disbursement of the loan.
Lending Club, for instance, charges origination fees between 1% and 6% of your total loan amount. If you’re taking out $4,000, that fee comes out to between $40 and $240.
Lenders also charge for things like a late payment or a bounced check. Hopefully, you won’t have to deal with either of these penalties, but they could become an issue if you run into financial hardship.
When choosing a lender, make sure to compare fees along with interest rates so you can find the most affordable option.
Add up the total cost of borrowing for a home improvement loan
Not only can home renovations improve your living space, but they can also increase the value of your home should you ever choose to sell.
However, you want to make sure you’re not sinking too much money into a project that isn’t worth the cost. By using our personal loan calculator and estimating your monthly payments and long-term costs, you can make a smart decision with your finances.
Don’t forget that personal loans aren’t your only option for financing a home remodel. Whether you want to get new cabinets or repaint your house, check out these other useful home improvement loans for funding your next project.
Interested in a personal loan?
Here are the top personal loan lenders of 2018!
|Lender||Rates (APR)||Loan Amount|
|1 Includes AutoPay discount. .
|7.39% – 29.99%||$1,000 – $50,000|
|4.98% – 14.24%1||$5,000 – $100,000|
|8.00% – 25.00%||$5,000 – $35,000|
|5.99% – 16.24%2||$5,000 – $50,000||Visit Citizens|
|5.99% – 35.89%||$1,000 – $40,000||Visit LendingClub|
|5.25% – 14.24%||$2,000 – $50,000||Visit Earnest|
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.