Credit & Debt

Should I Take Out a Personal Loan for Home Improvement Services?

Every now and then, a home improvement project becomes a necessity.

However, a problem lies in trying to find adequate funds for such a project.

While it’s ideal to pay for home improvement services by saving up money and paying straight out of pocket, doing so is not always a realistic option.

If paying directly out of pocket is not a realistic solution for you or your situation, you would be best served by a loan.

There are many types of home improvement loans you can potentially take out. Each comes with its own benefits and drawbacks.

If you’re looking to fund a small project, you might be best served by a personal loan.

Curious as to whether or not you should take out a personal loan for home improvement services? If so, read on.

Advantages of Personal Loans

When compared to other home improvement loan options, personal loans are exceedingly easy to take out.

Requiring minimal qualifications, they are advantageous for a few key reasons.

They Don’t Require Great Credit

Have bad credit?

No problem.

Even if you have poor credit, you’ll still be able to take out a personal loan.

While not every bank, credit union, or online lender will give you a loan regardless of your credit score, you’ll be able to find at least one that will.

It should, however, be noted that the lower your credit score is, the higher your interest rate will be. But at the end of the day, your credit score will not prevent you from securing a personal loan.

They Don’t Leave Your Home Vulnerable

A common way to purchase home improvement services is by taking out a home equity loan.

While these types of loans can be attractive due to their low-interest rates, they can be risky as well.

Why are home equity loans risky?

One word: collateral. 

Whereas a home equity loan typically requires that you put your home up as collateral, a personal loan doesn’t leave your home vulnerable at all.

Though a personal loan can cause you to rack up debt, it can not force you to hand over your home or any of your other belongings.

They Can Be Secured Quickly

If you’re looking to get your home improvement project underway as soon as possible, a personal loan might be just what you need.

Applying for a personal loan at a bank or credit union will usually put the money in your hands within a week. Applying for one online will typically give you access to your money within a day or less. It doesn’t get much quicker than that.

Drawbacks of Personal Loans

While there are quite a few advantages of taking out a personal loan, there are drawbacks as well.

High Interest Rates

Regardless of what your credit score is, taking out a personal loan is going to yield fairly high interest rates.

However, your exact interest rate will depend on your credit score as well as factors such as income and employment status.

Interest on a personal loan can be greatly affected by a poor credit score. In fact, when compared to someone with a nearly pristine credit score, someone with a high credit score will pay almost double in interest.

You may salivate upon receiving your loan, but cry as you attempt to pay off your interest.

Apply wisely.

Won’t Cover Huge Projects

Taking out a personal loan can be a great decision if you’re installing new flooring or counter tops.

But if you’re looking to give your home an entire overhaul, a personal loan is probably not going to cut it. Even if you are able to secure a personal loan in excess of R25,000, the interest you pay will be staggering.

In essence, personal loans are best-suited for small home improvement services.

Alternatives to Personal Loans for Home Improvement Services

Home Equity Loans

A Home equity loan is a viable option for those who might have poor credit history, but would like to take out a great deal of money.

Provided that a person is in good financial standing currently, a home equity loan allows that person to secure a low interest rate by putting his or her house up as collateral.

If you feel confident in your present financial situation, this just might be the way to go.

Credit Cards

In some cases, you can find credit cards with periods of 0% interest.

If you are able to pay off your credit card debt before that period expires, you will essentially be receiving a free loan.

Otherwise, credit cards are similar to personal loans. They possess fairly high interest rates and can be used without putting anything down for collateral.

Of course, if you want to secure a credit card with a large spending limit, you’re going to need a good credit score.

Where Can You Take Out a Personal Loan?


One of the most reliable places from which to take out a personal loan is a national bank.

Large banks provide personal loans that come with a variety of incentives and terms.

The drawback of dealing with a national bank is that you’ll likely be subject to strict guidelines, long application periods, an impersonal customer service.

Credit Union

Due to their generally low interest rates, credit unions can be great places from which to take out personal loans.

Credit unions are typically located in close proximity to you, allowing you to stop in and speak face-to-face with a representative whenever you have a question.

The downside to credit unions is that they’re often behind the times when it comes to technology.

You might not be able to make payments online or track your progress.

Online Lender

The quickest and easiest way of taking out a personal loan for home improvement services is by applying with an online lender.

If you’re looking to secure a loan from an online lender in South Africa, we here at Little Loans have you covered. Fill in a quick & easy application which gets sent to multiple lenders throughout SA.


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