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If you’re a homeowner with dreams of pool parties in your backyard, you may think a home equity loan is the way to finance a new swimming pool. Another option is a personal loan, which is an unsecured loan from a bank, credit union or online lender that can be used for almost any purpose, including swimming pools.
Interest rates on personal loans are typically higher than on home equity loans, but getting one can be faster — and you don’t risk losing your home as you do with a secured home equity loan.
Before diving in, consider that most financial experts do not recommend personal loans for discretionary purposes. If you take a pool loan, make sure the monthly payments fit in your budget, and have a plan to pay it off.
» MORE: Should I get a personal loan?
Here’s what you need to know about swimming pool financing, including where to get a pool loan, how to calculate costs, choosing a personal loan versus a home equity loan, and things to consider.
Where to get a swimming pool loan
Loan rates, terms and features vary by lender, so it’s best to compare multiple options. Online loans can be faster, but you may get a lower rate from your bank. Use the annual percentage rate, which includes the interest rate plus fees, to compare costs between loans.
Online lenders
LightStream provides loans for outdoor home improvement projects up to $100,000, including swimming pools. Its APRs start around 5% for well-qualified borrowers on loans between $10,000 to $24,999.
SoFi offers home improvement loans up to $100,000, repaid over two to seven years. The lender charges no fees and is an option for borrowers with good to excellent credit (690 or higher).
LendingClub has loan amounts up to $40,000 and shorter repayment terms than LightStream and SoFi. The lender deducts an origination fee of 1% to 6% from your loan amount, so factor in this cost.
Banks
Wells Fargo offers personal loans for home improvements up to $100,000. Existing customers may qualify for a small rate discount. New customers must visit a Wells Fargo branch to apply.
USAA is a financial services company offering members of military families personal loans up to $50,000 for nearly any purpose, including swimming pools. Borrowers must have excellent credit (above 719) to qualify for its lowest rates and repayment terms of more than five years.
Credit unions
Credit unions are nonprofit lenders that may provide low rates and flexible loan terms, especially for borrowers with bad or fair credit. Membership requirements typically involve living in a certain region, having family working in a certain industry or contributing to a particular cause.
Navy Federal Credit Union offers personal loans up to $50,000 that can be used to finance home improvements, including swimming pools, with repayment terms over 60 months.
» MORE: Best personal loans for home improvement
Summary of pool loan options
Swimming pool loan calculator
Use the calculator below to estimate the costs of a swimming pool loan. Enter the loan amount, term and estimated APR to see monthly payments, interest costs and total payments.
Financing your pool: Personal loan vs. home equity loan
Personal loans are an option if you lack home equity or if you don’t want to risk your home.
Pros of personal loans
- Fewer upfront fees: One fee that some lenders charge is an origination fee for processing the loan.
- Faster time to funding: There’s less paperwork and no appraisal requirements, and you may get your money the same day if you’re quick to provide the required documents.
- Pre-qualification: With online lenders you can pre-qualify, allowing you to compare rates and terms with no impact to your credit score.
- Less risk: You won’t lose your home if you don’t repay a personal loan. (Though there are consequences if you default.)
Pros of home equity loans
- Lower rates: Rates are generally lower than personal loans.
- Tax benefits: Interest on home equity loans may be tax deductible.
Swimming pool loans: Things to consider
Approval based on credit: Build your credit score before applying for a loan. You’ll need good to excellent credit to qualify for low rates and favorable loan terms.
Additional costs: Homeowners spend an average of $750 per month to maintain a pool during the summertime, according to Fixr. Other potential swimming pool costs include higher homeowners insurance and safety accessories, like a fence to protect children.
Lower return on investment: A backyard swimming pool may add to your family’s quality of life, but don’t expect it to increase the resale value of your home as much as other home improvement projects. And unlike with a car, a house or a boat, if you run into trouble keeping up with the loan, you typically can’t sell a swimming pool to help pay off the remaining debt.