Swimming pool loans: What to know about financing a pool

Professional in-ground pool installation can cost anywhere from $38,000 to $72,000, depending on the materials used, size of the pool, and its shape, according to HomeAdvisor. With an average cost of more than $54,000, it’s no surprise that some homeowners choose to finance this purchase with a personal loan.

Let’s dive into what swimming pool loans are, how you can secure one, and whether pool financing is right for your unique budget.

• What are swimming pool loans and how do they work?
• Where to get a swimming pool loan
• How to get a swimming pool loan
• Should you finance a swimming pool?
• Alternatives to swimming pool loans

What are swimming pool loans, and how do they work?

A swimming pool loan is a personal loan that you use to finance a swimming pool installation. Since personal loans are typically unsecured, you won’t be required to provide collateral for financing approval. And personal loan interest rates tend to be lower than credit card interest rates, making them a more affordable option for financing a pool.

The amount of money you can borrow and the terms offered vary from lender to lender. When you apply for a swimming pool loan, lenders will evaluate your unique credit profile, income, and other factors before deciding what rate and terms to offer you. Personal loan amounts typically range from $100 to $100,000, and repayment term lengths generally range from one to seven years.

Where to get a swimming pool loan

A variety of lenders provide swimming pool loans, including banks, credit unions, online lenders, and pool dealers. It’s wise to investigate personal loans from your current bank or credit union to see if you qualify for special rate discounts. Keep in mind that online lenders and pool dealers may be able to offer lower rates, especially for new customers. For example, your pool installation company may already have a relationship with a specific lender, making it easier for you to get approved.

Unfortunately, there’s no guarantee that a pool dealer will offer you the best rate or terms. Shopping around is the best way to help you identify the most affordable loans even if you have bad credit.

What credit score do you need for a swimming pool loan?

Each lender sets unique requirements for securing a personal loan, including the minimum credit score accepted. Generally speaking, personal loan lenders favor credit scores of 670 or above, which are considered good credit. Although scores of 669 or lower are considered fair, and scores below 579 are considered poor, some lenders may approve loans for borrowers with scores as low as 550.

If you’re concerned that your credit score may be too low — or if you’d like to increase your score before applying for a swimming pool loan — you can start improving it today by paying your bills on time and reducing your debt-to-income ratio.

How to get a swimming pool loan

Just as each lender has different requirements, interest rates, and loan terms, they also have different processes for applying and securing a loan. You’ll generally follow these steps to get a swimming pool loan:

1. Determine how much you need to borrow. Before applying for a personal loan, you need to determine how much the pool will cost. Shop around to compare prices, factoring in any additional expenses you may have, such as installing a fence around the pool or purchasing a pool cover.
2. Review your credit. You can request free copies of your credit report annually through AnnualCreditReport.com. Identify any errors on the report that you may need to dispute with the credit bureaus before you apply for a new personal loan.
3. Shop around and compare loans. Compare loans from a variety of brick-and-mortar and online lenders to ensure you’re getting the best rate and terms for your situation.
4. Apply for the loan. When you apply for a personal loan, you’ll typically need to provide proof of income, proof of identity and address, pay stubs, and recent tax returns. If you’re approved, you’ll typically receive your loan funds between one and five business days, though it could take longer in some cases.

Should you finance a swimming pool?

Financing a swimming pool with a personal loan may be a good decision if you can comfortably afford the payments with all interest and fees included. Your financial situation is unique, which is why you should consider the following before applying for a swimming pool loan:

• Need good to excellent credit to get the best rates — If your credit score is lower than 670, it’ll be difficult to secure the best rates and terms. Consider improving your credit score before applying for a personal loan so that you can receive better rates.
• Ongoing maintenance costs — The overall cost of pool ownership extends for the lifetime of the pool, not just the lifetime of your pool loan. The average yearly cost of basic pool maintenance is between $1,200 and $1,800, according to HomeAdvisor, and that doesn’t include miscellaneous repair fees or increased utility costs.
• Return on investment — A swimming pool can increase your home’s value, but there’s no guarantee that it will — or that you’ll recoup your initial investment. If you’re installing a pool for resale potential, consider if financing other home improvements will provide a better return on your investment.

Alternatives to swimming pool loans

A personal loan can be a good option for financing a swimming pool, but it’s not the only one you should consider. Here are three other pool financing options:

• Cash-out refinance — A cash-out refinance allows you to access your home’s equity by replacing your existing mortgage loan with a new loan for more than you owe on the loan — you can pocket the difference as cash. The new loan may feature a lower interest rate or different repayment terms. Although some homeowners use cash-out refinancing for home improvements like a swimming pool installation, one drawback is that you could increase your risk of foreclosure if you aren’t able to make your new mortgage payments.
• Home equity loan or home equity line of credit (HELOC) — A home equity loan and HELOC are both a second mortgage. With a home equity line of credit, you’ll receive cash upfront as one lump sum, and you typically have a fixed interest rate, so your monthly payment won’t change. But with a HELOC, you can continue to draw funds during the draw period as needed, up to your credit limit. HELOC interest rates are typically variable, which means your rate can go up over time. Since you provide your home as collateral, you risk losing your home if you aren’t able to keep up with the payments.
• Saving to pay in cash — Funding your swimming pool with cash ensures that you won’t pay interest or additional fees. Making large purchases in cash doesn’t affect your credit score, though it may take longer to save such a large amount. You also risk depleting your savings, which may be necessary during an emergency.