Swimming pool credit: What you need to know about financing a swimming pool

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Professionally installing an in-ground pool can cost between $38,000 and $72,000, depending on the materials used, pool size and shape, according to HomeAdvisor. With an average cost of over $54,000, it's no surprise that some homeowners choose to finance this purchase with a personal loan.

Let's take a look at what pool loans are, how you can get one, and whether pool financing is right for your unique budget.

You can use Credible to compare personal loan rates from various lenders in minutes.

What are pool credits and how do they work?

A swimming pool loan is a personal loan that allows you to finance the installation of a swimming pool. Since personal loans are generally unsecured, you will not have to provide collateral for funding 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 pool loan, lenders will assess your unique credit profile, income, and other factors before deciding on the rate and terms to offer you. Personal loan amounts typically range from $100 to $100,000, and repayment terms typically range from one to seven years.

Where to get pool credit

A variety of lenders offer pool loans, including banks, credit unions, online lenders, and pool dealers. It's wise to investigate personal loans with your current bank or credit union to see if you qualify for any special 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 is no guarantee that a pool dealer will offer you the best price or the best conditions. Shopping around is the best way to help you identify the most affordable loans even if you have bad credit.

Credible allows you compare personal loan rates without affecting your credit score.

What credit rating do you need for a pool loan?

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

If you're worried your credit score is too low - or want to raise your score before applying for a pool loan - you can start improving it today by paying your bills on time and reduce your debt ratio.

How to get pool credit

Just as each lender has different requirements, interest rates, and loan terms, they also have different processes for applying for and obtaining a loan. You will typically follow these steps to get a pool loan:

1. Determine how much you need to borrow. Before applying for a personal loan, you must determine the cost of the pool. Shop around to compare prices, taking into account any additional expenses you may have, such as installing a fence around the pool or buying a pool cover.
2. Check your credit. You can request free copies of your credit report each year through AnnualCreditReport.com. Identify any errors on the report that you may need to dispute with the credit bureaus before applying for a new personal loan.
3. Shop around and compare loans. Compare loans from a variety of physical and online lenders to ensure you get the best rate and terms for your situation.
4. Apply for the loan. When you apply for a personal loan, you will usually need to provide proof of income, proof of identity and address, pay stubs, and recent tax returns. If you are approved, you will usually receive your loan funds between one and five business days, although it may take longer in some cases.

If you're ready to apply for a pool loan, Credible lets you compare personal loan rates.

Should a swimming pool be financed?

Financing a swimming pool with a personal loan can 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 points before applying for a pool loan:

• Need good to excellent credit to get the best rates - If your credit score is below 670, it will be difficult to get the best rates and terms. Consider improving your credit score before applying for a personal loan in order to benefit from better rates.
• Routine maintenance costs - The overall cost of pool ownership spans the life of the pool, not just the term of your pool loan. The average annual cost of basic pool maintenance is between $1,200 and $1,800, according to HomeAdvisor, and that doesn't include miscellaneous repair costs or rising utility costs.
• Return on investment - A swimming pool can increase the value of your home, but there is no guarantee that it will or that you will recover your initial investment. If you are installing a pool for resale potential, consider whether financing other home improvements will provide a better return on your investment.

Alternatives to swimming pool credit

A personal loan can be a good option for financing a swimming pool, but it is not the only one to consider. Here are three other pool funding options:

• Refinancing by collection - A cash refinance lets you access the equity in your home by replacing your existing mortgage with a new loan for more than you owe on the loan - you can pocket the difference in cash. The new loan may have a lower interest rate or different repayment terms. Although some homeowners use cash refinancing for home improvements like installing a swimming pool, one downside is that you could increase your risk of foreclosure if you are unable 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 a lump sum of cash up front, and you usually have a fixed interest rate, so your monthly payment won't change. But with a HELOC, you can continue to withdraw funds during the drawdown period as needed, up to your credit limit. HELOC interest rates are generally variable, which means your rate may increase over time. Since you are providing your home as collateral, you risk losing your home if you are unable to meet the payments.
• Save to pay in cash - Financing your pool in cash ensures that you won't pay interest or additional fees. Making large cash purchases does not affect your credit score, although it may take longer to save such an amount. You also risk depleting your savings, which may be needed in an emergency.