If you’re like most people, you can’t afford to pay the cost of a new swimming pool out of pocket. Fortunately, there are a number of options for inground pool financing that you can take advantage of. Once you have an understanding of how much your pool is going to cost, you should carefully plan out how you’re going to pay for it – including any loans you’re going to need to take out. Because of the approvals and paperwork involved, this step has to be done early.
The First Rule of Inground Pool Financing
When financing a swimming pool, there’s one point you should be reminding yourself of constantly: Buying a pool is not an investment. A lot of people rationalize the cost of a pool based on the idea that it will “pay for itself” by increasing the value of their home. Such thinking leads people to take out loans that are larger, and have less favorable terms, than what they can afford. The truth is, while a swimming pool will almost always raise the value of your home somewhat, it probably won’t be enough to recoup your expenses – especially when you factor in maintenance.
That said, some banks may classify swimming pool loans as home improvement financing. This may allow you to get better terms, and potentially even a tax deduction.
Working with Your Contractor
If you’re working with an established contractor, they undoubtedly know the ins and outs of swimming pool financing. They have a strong incentive to help you get good financing, because the more comfortable you are with your loan, the more you’re likely to spend (of course, you want to avoid overpaying for features you don’t need, but you get the idea).
Some swimming pool companies even have deals with the banks to offer their own loans. These generally do not offer the best rates, but don’t dismiss them out of hand. Looking into the inground pool financing offered by pool companies might at least give you an idea of what sort of loan you need from the bank.
If you just want to know the best way to finance a pool, you’re unfortunately out of luck – there’s no simple answer. It all depends on your financial circumstances, the cost of the project (and the corresponding loan you need), and lots of other factors. You might be predisposed to a particular type of loan going in, but as always, it’s a good idea to shop around in case you missed something.
Swimming Pool Financing Options
Exploring all the different pool loan options can make your head swim. To simplify things, it’s helpful to remember that the vast majority of loans fall into one of the following broad categories:
Unsecured Personal Loan. This is the most straightforward option, but not necessarily the one that offers the best interest rates. “Unsecured” means the loan isn’t backed by collateral, but is based instead on your creditworthiness. If your credit rating is poor, getting an unsecured pool loan with acceptable terms can be difficult (but not impossible).
Home Equity-Based Financing. Here we’re lumping together home equity loans, home equity lines of credit, and second mortgages. These options all use the equity you have in your home as collateral for the loan. The rates are lower than unsecured loans, but if you haven’t lived in your home for very long or built up much equity, you probably won’t qualify.
Credit Card. Paying for a swimming pool with a credit card is rarely a good idea due to the high interest rates. That said, it’s not unusual for people to pay at least some part of the cost of a new pool with plastic. Even this should be kept to a minimum, as it can easily leave you with a balance you can’t pay off in the short term.
Again, your pool builder may attempt to steer you toward one of the above options – especially if they have a partnership with a particular lending institution. In many cases, they offer good advice, as their interest in getting a pool project dovetails with your need to get a loan. That said, you should do your own research and always be skeptical of offers that sound too good to be true.
How Much?
You obviously need a big enough loan to cover installation of the new pool, along with all the extras you may need like fencing, lighting, pool covers, and the like. Also keep in mind that pools cost money to maintain – money for things like chemicals, heating, and cleaning (if you use a pool service). These expenses can creep up on a new pool owner. To make sure you don’t get caught unawares, you should leave plenty of extra slack in your budget for the first six months to a year.
At the same time, it’s not a good idea to take out a loan that’s larger than what you really need. Remember the first rule – pools are a luxury, not an investment. To reduce the size of your loan or speed up the time it takes to pay it back, consider selling assets and/or cutting household expenses. Your new pool will take up a lot of your leisure time, so you may want to think about forgoing other expensive hobbies or postponing vacations.
But first and foremost, make sure the pool you’re getting is one that you can really afford. With all the features available, it’s easy to get in over your head. Choose the appropriate type of pool – vinyl, concrete, or fiberglass – and choose the extras that are really important to you. Most importantly, start your planning early and do it thoroughly, and you stand a better chance of making the right decisions.