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Finding the best options
Whether you’re looking to redo your kitchen cabinets with financing, borrow for upgraded kitchen appliances, or finance a new kitchen, it’s important to pick the right option.
Picking the right kitchen financing option gives you several benefits:
- Savings on your project: Kitchen loans can have major differences in interest and fees. Picking the right option could save you thousands of dollars.
- Manageable monthly payments for your kitchen: It’s important to pick a financing option that won’t blow a hole in your monthly budget.
- No one-time hit to your bank account: You may have the income to responsibly finance your kitchen renovation, but want to avoid a large one-time hit to your bank account. Financing can help you spread out your kitchen’s costs, but you’ll have to pay interest and fees.
In this article, we’ll show you how to finance a kitchen remodel and save money in the process. We’ll also tell you about the options we offer. Finally, we’ll also explain when it may be best to wait and save up the cash.
What you need to know
When considering whether to finance your kitchen or wait to save cash, you should consider two factors: your timeline and existing debt obligations.
Let’s take a look at each.
How urgent is your project?
Perhaps you want a new countertop. Or maybe you think it’s time to redo your cabinets. Projects like these tend to not be urgent, and we recommend waiting to save cash. You’ll avoid interest, fees, and a mark on your credit report.
Of course, you may have more urgent reasons to upgrade or replace your kitchen. Maybe it’s unusable and needs a repair. You could be planning to sell your home soon, and think new granite countertops would help your home close faster.
It’s best to finance your kitchen if you don’t have time to save cash.
What is your existing debt?
To the extent possible, you’ll want to avoid falling into too much debt. Look at your existing debt–including your mortgage–and think through whether you can afford to tack on another monthly payment for your kitchen.
If you’re planning a big kitchen remodel, you’ll want to consider a loan as your kitchen remodel financing option. These projects cost between $20,000 and $60,000–a perfect price range for a kitchen loan.
Before discussing different types of kitchen remodel loans, let’s take a look at key terms you should know when evaluating loans:
- Annual Percentage Rate (APR): APRs are the annualized cost of your loan. This rate includes both interest and fees–and is the most accurate representation of what you’ll pay.
- Term: Term refers to the period of time you’ll be repayment a kitchen loan–typically in fixed intervals.
- Prepayment penalties: Some lenders make you pay a fee if you pay back the loan ahead of schedule.
- Closing costs and origination fees: Many kitchen loans have fees that you pay when you get a loan.
- Monthly payment: This refers to the amount you’ll pay each month. This may change if you have a loan with a variable interest rate.
Knowing these definitions will help you assess your kitchen loan options.
Personal loans have fixed monthly payments, average terms of 3-7 years, and no home equity requirement. Most personal loan providers offer up to $35,000, although you can get more if you have excellent credit. You may be able to get a personal loan with a credit score above 500, but your odds are higher if your credit score is above 640.
Personal loans are best for urgent kitchen remodels. You can get funded as soon as 24 hours after you apply. You’ll just have to submit income verification such as a W-2 to your lending provider. These loans also have no prepayment penalties.
Hearth can find you personal loans on your project. After you complete our 60 second loan request, we’ll show you rates without affecting your credit score. By comparing rates from multiple lending providers, you can find savings on your project–we find over a thousand dollars in savings for many homeowners. When you find an option you like, you’ll be able to continue your application and get a final decision from the lending partner.
Because personal loans are not secured by your home equity, you’ll pay higher rates than you would on a secured option. Personal loan interest is also not tax deductible.
Home equity loans
You may also want to consider a home equity loan, which let you borrow more than a personal loan. Home equity loans use your home equity as collateral, so there’s typically a longer application process than you’d find on an unsecured option. On the other hand, home equity loans have lower rates than unsecured options and the interest is tax deductible. It usually takes 4-6 weeks to get a home equity loan.
Home equity loans also have high closing costs and prepayment penalties.
You can learn more about home improvement loans by reading our complete guide.
Lines of credit for your renovation
In contrast to a loan, lines of credit let you borrow as needed up to a predefined limit. In this section, we’ll look at two common types: credit cards and home equity lines of credit.
Credit card options
Hearth offers two types of credit cards as a kitchen remodel financing option: no-interest credit cards and cards for those bad credit.
Finance your kitchen with an interest-free card If you have decent credit, you may qualify for a 0% APR credit card. You could use this card to finance your kitchen project without paying any interest. These cards usually have an interest-free 6-18 month introductory period before interest kicks in. It’s important to pay back these cards before this period ends to avoid interest.
These cards are best for smaller kitchen remodels, as you risk not being able to pay off larger projects before you owe double-digit interest.
Finance a kitchen with bad credit Even if your credit isn’t great, you can finance your kitchen remodel with a credit card for bad credit. However, because these cards have high rates, we recommend improving your credit score or saving cash if you can. Be sure you develop a plan to pay off the card as quickly as possible if you need a card.
Kitchen cabinet financing
Cabinet projects can cost anywhere from a couple hundred to several thousand dollars. For example, you’ll pay between $2,000 and $6,000 for wooden cabinets, and over $9,000 for a custom project with high-quality wood.
You can use any of the options we’ve discussed to finance your cabinet. Hearth helps you find personal loan options that can help you finance your cabinets quickly.
Saving on your kitchen
Looking at several different kitchen financing options helps you unlock savings for your project. Use Hearth to compare rates and find savings from several lending partners without affecting your credit score.