6 Loan Options to Finance a Pool

You’ve decided to install a swimming pool in your backyard. Congratulations. Now you just need to figure out how you want to pay for it. You’re probably wondering whether it’s best to pay with savings or get a loan? If you’re unsure of the various ways you can finance a pool, here are six options to consider.

1. Personal loan

Personal loans are unsecured, and the application process is much simpler than secured ones. You don’t need collateral. This means that, in the event of a default, the lender can’t repossess anything. However, this type of loan requires solid credit and income histories.

A good credit score can lock the interest rate (fixed rate) for the duration of the loan. Usually, the shorter the loan, the more favorable the interest rate. Another advantage of a personal loan is the flexible repayment terms that often allow paying off of the loan without any penalty.

You can combine several personal loans from multiple lenders to better fit your budget. Once each loan is funded, you can use it to purchase the pool installation from a contractor.

Featured lenders for personal loans

Lending PartnerMinimum FICO scoreEstimated APR 
60015.49% – 34.99%*Apply
6802.19% – 17.49% (with AutoPay)*Apply
650Fixed:
5.49% – 14.24% APR (with AutoPay)*
Variable:
4.99% – 11.14% APR (with AutoPay)*
Apply
6605.99% – 35.89%*Apply
6204.93% – 29.99%*Apply
5809.95% – 35.99%*Apply
7005.25% – 12%*Apply

2. Home equity line of credit (HELOC)

If you have a good first mortgage, consider getting a HELOC. It works just like credit cards. You can use the line of credit as needed and pay it off at any time. In the past, homeowners could borrow up to 100% of the available equity. Today, only 80% to 90% is allowed. Most HELOCs are good for 10 years and can be renewed.

The disadvantages are that it uses your home as a collateral and the interest rates are adjustable. Moreover, when prime rate increases, your monthly payment increases as well.

3. Home equity loan (HEL)

This is a second mortgage with a fixed rate for a certain period, which can be anywhere from five to 30 years. Borrowers can enjoy tax benefits with this type of loan, as it’s considered a mortgage as well. For those who wish to receive a fixed amount of monthly bill and tax benefits, this loan is a good choice.

However, just like the first mortgage, your home is the collateral. Moreover, when the property value goes down, like in 2008, you may end up with a high balance without equity or with negative equity. The maximum loan you can receive is up to 90% of the home equity.

4. Mortgage refinance

Refinancing means getting a brand new loan altogether. You can choose to pay a fixed rate instead of an adjustable rate, whenever available. It’s ideal for people who want to pay a lower monthly mortgage payment without the hassle of paying a second mortgage or a line of credit.

It’s also ideal for people with limited cash at hand who want to cash out equity for a large purchase (in this case, is a swimming pool). Be aware that, whenever you’re applying for a new mortgage, you’ll need to pay for refinancing costs, which can be anywhere from 3% to 6%.

5. Pool company financing

This may be done through the pool company itself or through a partnering lender. The loan provided can be secured or unsecured, so you must be aware of the options, the advantages, and disadvantages of each type of loan.

The application process usually takes a short time, which can be as quick as 24 hours. While the processing time can be short, the options of the lending institution can be limited, so you might not be able to shop around for the best rates.

6. Tap into your 401(k)

If you have 401(k) retirement account, you can consider borrowing against it for the swimming pool project. Usually, 401(k) loans must be repaid within five years. Otherwise, you’ll be penalized with 10% early withdrawal fee. This type of loan is ideal if you’re expecting a large cash influx that you can use to quickly pay it off.

Nate O’Neill of Stockton, California, borrowed against his 401(k) retirement account for his backyard pool project. Within five months, he paid it off, so he wouldn’t need to worry about paying the monthly payments and interest rates. What he liked about this loan was that the interest rate was only one percentage point higher than the prime rate. “I liked using my own retirement fund for the pool because I was my own lender,” he said with a smile.

Now, it’s time to finally decide how you’ll be financing your pool.

Depending on your financial situation and other preferences, SuperMoney has a search engine that can help you find and get pre-approved for the right loan. You can also find the most suitable personal loan or home loan for your new pool without hurting your credit score.

Featured lenders for personal loans

Lending PartnerMinimum FICO scoreEstimated APR 
60015.49% – 34.99%*Apply
6802.19% – 17.49% (with AutoPay)*Apply
650Fixed:
5.49% – 14.24% APR (with AutoPay)*
Variable:
4.99% – 11.14% APR (with AutoPay)*
Apply
6605.99% – 35.89%*Apply
6204.93% – 29.99%*Apply
5809.95% – 35.99%*Apply
7005.25% – 12%*Apply