Family moving into a new home

Moving Loans: How To Tackle Your Relocation Expenses

TLDR

What You Need To Know

  • Looking to move, but not sure you’ll be able to cover the costs? It’s possible to get a moving or relocation loan in a week or less, without it costing you a fortune
  • If your cash flow is limited and your credit is good, a moving or relocation loan can help make your move a lot more manageable
  • There are other ways to get money to cover the cost of your loan, including employer reimbursements and grants and paying for it out-of-pocket

Contents

There are a lot of good reasons to move, especially when it comes to finding a home for yourself and your family. In fact, between 2017 and 2021, 40% – 50% of all movers cited housing-related reasons as their reason for moving.[1] 

But moving can also be expensive. Moving out of state can cost almost $5,000 on average while short-distance moves start around $700. If you have more stuff to move or are planning to move cross-country – that can cost you between $4,000 – $10,000 or more.[2]

Looking to move, but not sure you’ll be able to cover the costs? It’s possible to get a moving or relocation loan in a week or less, without it costing you a fortune. There are also ways to get other people to help cover the costs of your move and make moving less expensive. Read on to learn more.

What Are Moving and Relocation Loans?

Moving and relocation loans are unsecured personal loans that you can get through many banks, credit unions or online lenders. In most cases, you can get these loans within a week and sometimes in as little as 1 business day.

These are usually loans with fixed-interest rates where you borrow a lump sum of money and pay it back in monthly installments over a predetermined period of time, usually with repayment terms of 2 – 5 years.

With a good credit history, the interest rates for personal loans usually start around 8% – 9%.[3] But there are personal loan options with bad credit available. If you have less-than-good credit, you may need to pay more in interest. 

If you want to improve your chances of getting a personal loan, check your credit report for any errors or fraud and look for ways to improve your credit score.

How Do Moving Loans Work?

Let’s say you’re working in a major city as a computer programmer. And your income is $100,000 a year or $8,333 a month. You want to make sure your housing-related expenses don’t exceed 28% of your annual income, so you look for a home to rent for $2,333 or less.

With that much money, you may be able to rent a small apartment in a major city. But outside of the city, you could easily afford a mortgage on a three-bedroom home for $500 less per month. Your boss says you can go remote, so why not?

Money is tight, so you decide to borrow $5,000 to cover the cost of the move. If you take out a personal loan at 10% interest and pay it back over 2 years, it will cost you $231 a month and you’ll pay $537.39 in interest over the life of the loan. The amount you save each month by moving more than covers the cost of the loan, so you decide to go for it.

What Costs Can Moving Loans Cover?

When taking out a moving loan, make sure you account for all of the costs of your move. These can often add up quickly and take many movers by surprise. The amount you’ll need to pay will also depend on the distance you plan to travel and the number of rooms worth of stuff that you plan to bring with you.

  • Movers/unpackers: Hiring professional movers and unpackers can save you a lot of time and help you avoid accidentally damaging your stuff. But it won’t be cheap. Movers typically charge between $25 – $50 per hour. Short-distance moves under 100 miles can cost over $1,600 and longer moves can cost $4,500 or more.[2]

    Or, if you move yourself, you’ll need to rent a moving truck, cover the security deposit, pay for fuel and buy pizza for the friends who help you pack up and move out.
  • Packing materials: Even when you hire movers, you’ll generally need to pack your stuff before they arrive. That means you’ll need boxes and packing tape. You may be able to get some boxes for free from your local grocery or retail store. But some items may require specialized packing boxes and other materials like bubble wrap or packing peanuts that you can’t usually get for free.
  • Travel: If you’re moving more than a day’s drive from your current home, you’ll probably need to cover the costs of a hotel, meals and gas for yourself and your family. And if you’re flying, you’ll need to consider the cost of one or more one-way tickets.
  • Lodging and storage: If there’s a delay between when you arrive and when you move into your new home, you may need to cover the cost of temporary lodging. You may also need to store your stuff in between when you move from one home to another.
  • Deposits and set-up fees: When you first move into a new home, you may need to prepay for utility hookups, cable and internet bills and other fees. To cover these expenses, you may want to build in a cushion to cover these expenses as well.

What Are the Pros and Cons of Moving Loans?

PROS Pros of Moving Loans👍

Lower interest rates

Moving loans usually offer interest rates starting around 8% – 9%.[3] That’s usually lower than credit cards, which can have interest rates ranging from 15% – 25%.

Quick turnaround

Most lenders can provide moving loans in less than a week and sometimes within 1 business day.

Larger loan amounts

Moving loans allow you to borrow between $1,000 – $50,000. That gives you more money to cover expected and unexpected moving costs.

Predictable to budget

Because you can determine the repayment period, you can control how much your monthly payment will be. That makes it easier to select a repayment schedule that fits your budget.

CONS Cons of Moving Loans👎

Extended repayment period

While having fixed monthly payments can be convenient, it’s also a long-term commitment and one that you’ll need to meet if you don’t want to damage your credit.

Origination fees

Personal loans can charge origination fees ranging from 1% – 5% of the loan’s value. These get added to your loan balance, increasing both your interest and principal.

If you have the cash to spare, taking out a moving loan may not make sense. But if your cash flow is limited and your credit is good, a moving or relocation loan can help make your move a lot more manageable.

What Are the Alternatives to Moving Loans?

If a moving loan isn’t the best option, there are other ways to get money to cover the cost of your loan, including employer reimbursements, grants and paying for it out-of-pocket.

Moving expense reimbursements

If you’re moving for work, some employers may offer relocation reimbursements to help you cover the costs of your move. These can be done with either a lump sum payment, a reimbursement after the relocation or your employer can even pay movers and other vendors directly. 

Relocation assistance

Some employers may also provide access to relocation assistance services. These are usually third party companies that act as boots on the ground before you move. These companies have relationships with moving service providers, which means you may be able to get a discounted rate.

Whether you pay for all or part of these expenses will be up to you and your employer, but they can help make the moving process smoother by:

  • Finding you a real estate agent
  • Scouting housing options and acting as a go-between for you and your real estate agent
  • Connecting you with movers and unpacking services
  • Arranging for temporary lodging when you arrive
  • Helping you get your utilities connected before you arrive
  • Getting your kids registered for school

If you are planning to move for work, discussions about reimbursement and relocation assistance should be done when you negotiate your contract with your new employer.

Relocation grants

If your employer doesn’t cover relocation expenses or if you’re moving without the benefit of having a new job waiting for you at the other end, there are other resources available to help you cover the cost of moving. 

These can include: 

  • Modest Needs Grants: These are one-time self-sufficiency grants of $750 to $1,250 given to people working and living just above the poverty level. Just keep in mind that the money will be paid directly to service providers, not to the borrower.
  • Housing Industry Foundation’s Emergency Housing Fund: The fund offers one-time grants of up to $2,500 to eligible applicants who need support in housing relocation. They can process grants within 24 hours, but applications are only accepted on a referral basis.

Credit cards

Depending on the amount you need to cover your move, you may be able to put it on your credit card or cards. This can be convenient – no application process, just swipe your card and go. 

The thing to remember is that credit cards have higher interest rates compared to loans. The longer you carry a balance on your credit card, the more you’ll pay in interest, so it’s a good idea to use your card responsibly.

If you can take advantage of a zero or low-interest credit card you may be able to pay less in interest. However, these offers usually only last 6 – 24 months.

Also, be wary of using your credit card at the ATM. You can take out a cash advance, but it will cost you.

Savings

If you know that you’ll be making a move, try to set aside money in advance to cover your moving expenses. You can do this by committing to save a certain amount of money each week or each month and putting it into a savings account. 

You can also look for ways to save before you move by canceling subscriptions, cutting back on regular expenses and putting the difference into your savings account.

Can You Write Off Moving Expenses?

In the past, you could deduct your moving expenses on your tax return. Unfortunately, the 2017 Tax Cut and Jobs Act (TCJA) ended that until 2025. If you received moving reimbursement money in the past you didn’t have to count this as income. The TCJA also changed this and reimbursements now count as taxable income until 2025.[4]

It’s Time To Get Moving

Ready to make a move, but not sure how you’re going to afford it? You have options. Whether you take advantage of a moving or relocation loan or get your funding through another source, making a big move is possible. You just need to do a little planning and make sure you don’t overextend yourself financially.

  1. U.S. Census Bureau. “US Migration Continued to Decline From 2020 to 2021.” Retrieved July 2022 from https://www.census.gov/library/stories/2022/03/united-states-migration-continued-decline-from-2020-to-2021.html

  2. Home Advisor. “How Much Does It Cost to Move Out of State?” Retrieved July 202 from https://www.homeadvisor.com/cost/storage-and-organization/long-distance-move/

  3. National Credit Union Administration. “Credit Union and Bank Rates 2022 Q1.” Retrieved July 2022 from https://www.ncua.gov/analysis/cuso-economic-data/credit-union-bank-rates/credit-union-and-bank-rates-2022-q1

  4. Internal Revenue Service. “Moving Expenses to and from the United States.” Retrieved July 2022 from https://www.irs.gov/individuals/international-taxpayers/moving-expenses-to-and-from-the-united-states

ICYMI

In Case You Missed It

  1. If you are planning to move for work, discussions about reimbursement and relocation assistance should be done when you negotiate your contract with your new employer

  2. In the past, you could deduct your moving expenses on your tax return. Unfortunately, the 2017 Tax Cut and Jobs Act (TCJA) ended that until 2025[4]

  3. If you’re moving without the benefit of having a new job waiting for you at the other end, there are other resources available to help you cover the cost of moving

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