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Thanks to high demand and inflation, the cost of home repairs has been on the rise in recent years. In 2023, the average household spent $2,458 on maintenance and $1,667 on emergency repairs, according to Angi’s State of Home Spending Report. The report also found that total spending across home improvement, maintenance, and emergency repairs increased 6% compared to 2022.

The most common home repairs include the usual suspects: electrical, plumbing, HVAC, water damage, and termite damage. Keep reading to learn more about these issues and the cost of repair or replacement, so you can be prepared when reality bites.

Estimated Cost of the Most Common Home Repairs

Low-cost preventive measures — like cleaning your gutters or getting your heating and cooling systems serviced annually — can help keep common home repair costs down. But even with the best preparation, surprises (like a busted pipe or roof leak) happen, and when they do, you can be on the hook for thousands of dollars. Whether you’re a new or longtime homeowner, it’s a good idea to plan for — and budget for — home repairs.

Below is a roundup of the most common home repairs and average costs.

Recommended: How to Pay for Emergency Home Repairs

Foundation Repair

A number of different issues can occur with foundations, some of which are more serious (aka, costly) than others. Among the most common problems are foundation cracks, which can be caused by house settling or changes in soil pressure around the home. Cracks can lead to water damage or cause the walls in your foundation or home to bow. Foundations can also begin to sink, due to changing weather patterns, nearby tree roots, or erosion.

Since the foundation is the footprint of your home, repairs can be complicated and expensive. According to Angi, foundation repair costs can range anywhere from $2,196 to $7,921.

Average cost of foundation repair: $5,056

Electrical Issues

While there are many home repairs you can safely DIY, electrical issues and wiring are generally best left to professional electricians. Working with live wires can be dangerous and faulty electrical work can be a significant fire hazard. Some signs you may need to call an electrician include:

•   Burning smell coming from an outlet

•   Buzzing or sizzling noises coming from an outlet

•   Flickering lights

•   Outlets feel hot to the touch

•   You have 2- rather than 3-prong outlets

•   Circuit breaker continually trips

•   Appliances spark when plugged in

Depending on the length and complexity of the job, the cost of hiring an electrician ranges between $163 and $535. Installing a new outlet can run $200 to $300, for example, while replacing a breaker panel can cost anywhere from $520 to $2,120.

Average cost of electrical repairs: $348

Recommended: What Is the Cost to Rewire a House?

Roof Repair

Your roof protects your home from the elements, so it’s important to keep it in top condition. If you notice any damage or signs of wear and tear, you’ll want to address them sooner rather than later. This can help prevent small problems from becoming serious and expensive. Signs that your roof may be compromised include broken, cracked, curling, or missing shingles, and any interior signs of water damage (such as dark spots or discoloration on walls or ceiling and/or mold or rotting wood in the attic).

The cost of a roof repair will depend on your home’s location, roofing material, size of your home, and the type of roof. On average, costs run between $391 and $1,901. By contrast, a full roof replacement can run between $5,900 to $12,900. Due to the significant price difference, you would generally only invest in a new roof if the damage to your existing roof is extensive or the roof is near the end of its life.

Average cost of roof repairs: $1,133

Repair or Replace a Water Heater

Due to mineral buildup and the routine breakdown of components, water heaters do not last forever. Depending on how extensive the repairs your water heater requires, you can be on the hook for a new unit entirely. And if you’ve ever taken a cold shower in the middle of winter, you know this is one repair that is essential to your quality of life.

On average, homeowners spend anywhere from $221 to $980 on water heater repairs. Your actual bill will depend on the cost of the part needed for the fix, how much your local water heater professional charges for labor, and the length of the job. Where you live and where the water heater is located in your home can also impact costs.

Average cost of water heater repairs: $600

Water Damage

Water damage is fairly common. It can result from a crack in an old pipe, a leaky roof, an unusually strong storm, or sewage backup. To prevent mold growth and further damage, it’s best to fix the issue and clear out moisture as soon as you spot it.

Water damage restoration can involve replacing wallboard, flooring, and/or ceilings, as well as ensuring that no mold spores are left behind to spread once the repairs are complete. Two important factors influencing price are the square footage affected and the type of water (i.e., whether it’s clean or has been contaminated with potentially harmful substances). The cost of water damage restoration generally ranges between $1,300 and $5,600.

Average cost to fix water damage: $3,300

Replacing Pipes

Replacing older pipes is a common home repair often needed after a home inspection. Common problems include dated construction materials with a known problem in their manufacturing, signs of corrosion, clogs, and leaks. And because pipes run behind walls and underground, repair costs often include patching up interior holes and dug-up yards.

The good news is that not all leaks, burst pipes, and signs of corrosion require replacing large amounts of plumbing. Often, a plumber can replace a small section of the pipe affected by the damage. The cost to install pipes for a repair ranges from $370 to $2,108, though it can run higher if the damaged pipes are difficult to access.

Average cost to install pipes: $1,237

Recommended: Renovation vs Remodel: What’s the Difference?

Septic System Repair

A septic tank contains and filters household wastewater. If it is damaged or not functioning properly, it’s important to deal with the problem quickly — otherwise, you could be dealing with a smelly and costly mess. Sewage backups can occur when the septic tank becomes clogged or full, there’s a problem with devices within the tank, or there’s a blockage in the home’s main drain line leading to the tank.

Depending on the type of repair, tank size, permits, and other factors, the cost of a septic tank repair runs, on average, between $630 and $3,035. A small fix like repairing a septic tank lid could cost less ($150 to $500); but if you need to replace the tank, you could be looking at a bill as high as $9,500.

Average cost to repair a septic system: $1,831

Heating or Air Conditioning Repair

Your home’s HVAC (which stands for heating, ventilation, and air conditioning) system plays a key role in keeping your home comfortable to live in. Though there are many different types of HVAC systems, they generally all work by using energy to heat or cool the air to a desired temperature. The system may also add/remove moisture and filter your home’s indoor air.

An HVAC system typically has two main components: a heater (which could be a furnace, boiler, or heat pump) and an air conditioning (AC) unit. The type of system you have and the component that’s broken will significantly influence the cost of repairs. For example, an AC system repair can run anywhere from $450 to $2,000, while a furnace repair tends to run between $130 and $1,200. On average, homeowners spend between $130 and $2,000 on HVAC repairs.

Average cost to fix a heating or air conditioning system: $350

Mold Removal

Mold develops inside homes as a result of moisture and can lead to health problems. Signs that you may have a mold problem include:

•   Musty odor in a specific area

•   Discoloration on the walls

•   Peeling, cracking, or warping of floors or walls

•   Leaks or water damage

•   Darkening around tile grout

•   Worsening of allergy symptoms

While you may be able to remove small amounts of mold yourself (provided you’re certain the mold isn’t toxic), often the best option is to hire a mold remediation professional.

The cost for mold removal will vary widely depending on where it is located in your home. Mold growth in hard-to-reach areas, like drywall or your HVAC system, generally costs more to remediate since it can require more time, materials, and labor. The size of the infestation and the type of mold that is growing also influence costs. On average, mold removal runs between $373 and $7,000.

Average cost of mold removal: $2,362

Termite Damage

The problem with termites is that they literally eat away at your house. They can also eat through your budget: The cost to repair termite damage can range anywhere from $1,000 to $10,000 or even more.

Generally, the longer termites chew on the wooden structure of your home, the more costly the repair will be, so it’s key to recognize — and deal with — any signs of a termite infestation early. If you catch a termite problem early, for example, you may only need to replace a few damaged boards or joists, which can run from $250 to $1,000. If the problem goes on for a while, however, you may need to replace damaged walls, framing, or floors — at a cost of $1,000 to $3,000. Worst-case scenario: Termites do enough damage to your home’s infrastructure (like beams or load-bearing walls) that it becomes structurally unsound. A major termite repair job can run from $3,000 to $10,000-plus.

Average cost to repair termite damage: $3,000

Average Cost of Home Repairs

Trying to predict — and budget for — home repairs can be challenging. However, there are several rules of thumb that can help homeowners:

•   The 1% Rule. One common guideline is to set aside approximately 1% of your home’s value annually for home maintenance. So if your home is worth $500,000, you’d want to have $5,000 tucked away in savings to cover general upkeep and repairs for the year.

•   The Square Foot Rule. Since a larger home typically costs more to maintain than a smaller one, another formula is to use the square footage of your home to estimate maintenance and repair costs. With this approach, you set aside $1 for every square foot of livable space. So if your home is 2,300 square feet, you would want to have $2,300 in savings earmarked for home repair costs.

•   The 10% Rule. With this rule of thumb, you put aside 10% of all your main monthly expenses (such as mortgage, taxes, and insurance) for your monthly home maintenance budget. For example, if your mortgage is $1500/month, taxes are $300/month, and insurance is $150/month (a total of $1950), your budget for home maintenance would be roughly $195 per month or $2,340 a year.

If you don’t have enough savings to cover the cost of a necessary home repair, there are financing options, including home equity lines of credit (HELOC) and credit cards (though this can be an expensive choice).

You can also use a personal loan to cover the cost of home repairs or improvements. Available through banks, credit unions, and online lenders, this type of loan (sometimes called a home improvement loan) typically doesn’t require any type of collateral or home equity. However, you usually need good to excellent credit to qualify.

The Takeaway

It’s tough to predict the cost of home repairs. Different budgeting standards suggest putting aside 1% of your home’s value or $1 per square foot annually. In 2023, the average household spent $2,458 on maintenance costs and $1,667 on emergency repairs. Among the priciest home repairs are major foundation work (up to $7,921), roof replacement (as much as $12,900), and septic tank replacement (which can run $9,500). Even expenses like fixing termite damage or replacing a broken water heater can all but consume your savings.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scoring models, however, there is a clear winner: FICO® Score is used in roughly 90% of lending decisions.

It’s crucial that consumers understand at least the basics of how credit reports work and credit scores are calculated. After all, a high credit score can get borrowers the best deals on loans and credit cards, potentially saving them many thousands of dollars over a lifetime. Read on to learn how you can build a credit history that lenders will swoon over.

Will My Credit Score Be the Same Across the Board?

In a word, no. Credit scores vary depending on the company providing the score, the data on which the score is based, and the method used to calculate the score.

In an ideal world, all credit bureaus would have the same information. But lenders don’t always report information to every bureau, so there will be variations in your credit file — usually minor — from bureau to bureau.

How Are Credit Scores Calculated?

Regardless of the scoring model used, most credit scores are calculated with a similar set of information. This includes information like how many and what types of accounts you have, the length of your credit history, your payment history, and your credit utilization ratio.

Lenders like to see evidence that you have successfully managed a variety of accounts in the past. This can include credit cards, student loans, personal loans, and mortgages, in addition to other types of debts. As a result, scoring models sometimes include the number of accounts you have and will also note the different types of accounts.

The length of your credit history shows lenders that you have a record of repaying your debts responsibly over time. Scoring models will factor in how recently your accounts have been opened.

Your payment history allows lenders to see how you’ve repaid your debts in the past. It will show details on late or missed payments and any bankruptcies. Scoring models typically look at how late your payments were, the amount you owed, and how often you missed payments.

Each scoring model will place a different weight of importance on each factor. As an example, here are the weighting figures for your base FICO Score:

Payment History	35%
Amounts Owed	30%
Length of Credit History	15%
Credit Mix	10%
New Credit	10%

Recommended: Can You Get a First-Time Personal Loan With No Credit History?

Which Credit Score Matters the Most?

As noted earlier, the credit score that matters the most is generally your FICO Score, since it’s used in the vast majority of lending decisions. There’s really no way to determine which credit score is most accurate, though, because they all use slightly different scoring models to calculate those precious three digits.

Even within your FICO Score, there’s variation. The most widely used FICO Score is FICO 8 (though the company has released a FICO 9 and FICO 10). This differs from previous versions in key ways:

•   Credit utilization is given greater weight.

•   Isolated late payments are given less weight than multiple late payments.

•   Accounts gone to collections for amounts less than $100 are ignored.

In addition, FICO can tweak their algorithm depending on the type of loan you’re applying for. If you’re looking to get an auto loan, your industry-specific FICO Score may emphasize your payment history with auto loans and deemphasize your credit card history.

As you can see, slight differences in method can result in different credit scores even given the same source data.

What Are the Largest Three Credit Bureaus?

The three major credit bureaus are Experian, Equifax, and TransUnion. These bureaus collect and maintain consumer credit information and then resell it to other businesses in the form of a credit report. While the credit bureaus operate outside of the federal government, the Fair Credit Reporting Act allows the government to oversee and regulate the industry.

It’s worth noting that not all lenders report to the credit bureaus. You may have seen advertisements for loans with no credit check. Lenders that offer this type of loan won’t check your credit, and typically don’t report your new loan or your loan payments to the credit bureaus. Because these loans are riskier for the lender, they can justify high interest rates (possibly as much as 1000%) and faster repayment schedules. Consumers should beware of predatory lenders, especially risky payday loans and other fast-cash loans.

How To Find Your Credit Score

Your credit history and score play a large role in your personal finances. They can impact everything from taking out a mortgage or renting an apartment to buying a car and refinancing your student loans. Having an idea of what your credit score is can help you determine what your loan may look like and how much you can afford to borrow.

You can request a free copy of your credit report from each of the major credit bureaus at AnnualCreditReport.com. Typically, your credit reports will not contain your credit scores. However, you may be able to access your FICO Score for free through your bank or credit card company (it may be on your statement or you may be able to see it by logging into your account online). You can also purchase credit scores from one of the three major credit bureaus or FICO. Some credit score services offer free scores to any user, while others only offer sores to customers who pay for credit monitoring services.

Be careful when you pull your free credit reports not to accidentally opt in to an add-on service that will charge you for special tools or credit monitoring.

Building Strong Credit

Credit scores aren’t set in stone. They evolve constantly as new financial information comes in, both positive and negative. Here are some strategic steps to consider for those trying to build a positive credit history:

Make Payments on Time

This includes credit card payments, rent, loans, utilities, and any other monthly bills or payments. Lenders often consider past behavior to be a predictor of future behavior and want to avoid lending money to individuals with a history of missed payments.

Pay Down Revolving Credit

Revolving credit refers to credit cards and credit lines, such as home equity lines of credit (HELOCs). Lenders generally like to see that you use no more than 30% of the total revolving credit available to you. It’s an indicator that you are able to effectively manage your credit.

One popular way to pay down high-interest revolving debt, is to use a debt consolidation loan. These are unsecured personal loans that typically offer lower fixed interest rates compared to credit cards. Getting approved for a personal loan is fairly straightforward, and you can usually shop around for the best personal loan interest rates without it affecting your credit score.

Be Selective About New Accounts

Opening a new credit card or applying for a loan generally involves a hard credit inquiry. Too many hard credit inquiries can have a negative impact on the applicant’s score. So while having a diverse mix of credit is a good thing in the eyes of lenders, opening a number of new accounts at once may be counter-productive.

The Takeaway

All three major credit bureaus — Experian, Equifax, and TransUnion — are more alike than they are different, and any variations in their data are usually minor. Equifax is the largest credit bureau in the U.S., but TransUnion and Equifax are thought to be just as important. When it comes to credit scores, however, lenders prefer FICO Score by a wide margin.

SoFi Personal Loans

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

https://www.sofi.com/signup/pl?appType=pl“>

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Large trees, even landmark ones, sometimes have to be removed when they’re dead, dying, or growing too close to other structures. How much it costs to cut down a tree varies depending on where you live, the tree’s height and diameter, how accessible it is, and other factors. On average, you can expect to pay $750 to remove a tree.

While tree removal is costly, it’s often better to spend the money up front rather than risk a tree falling and causing injury or damage to nearby property. Keep reading to find out what tree removal costs and the complications that may drive up your price.

Average Tree Removal Cost

Removing a tree can range anywhere from $150 to $2,000, with the average landing at $750, according to Angi. Shorter trees will come in on the low end of the range, while larger trees can run between $800 to $2,000. A tall, hard-to-access tree can cost even more — as much as $10,000.

If you have multiple trees to remove, the costs can really add up. While many people throw it on a credit card, that can be an expensive solution. If you need financing, you might consider getting a home equity line of credit (HELOC), which allows you to borrow against the equity in your home as you need it.

Another option is to take out a personal loan for home improvement. These loans don’t require equity in your home or collateral, and many lenders offer same- or next-day funding. However, rates can be higher than home equity options.

Cost of Tree Removal by Type

A tree’s size generally impacts cost more than type. However, some species of trees are not as dense or as compact as others, making them easier (and less expensive) to remove. Determining the type of tree you need to have removed can also give you an idea of its height at maturity and provide insight into potential costs. Here’s a look at costs based on tree type.

Tree Type	Average Removal Cost
Oak	$200–$2,000
Cedar	$250–$1,500
Pine	$250–$1,500
Maple	$250–$2,000
Ash	$250–$1,800
Palm	$650–$1,500
Aspen	$1,000–$1,800

Recommended: Typical Landscaping Costs

Factors That Affect Tree Removal Cost

The cost of tree removal typically includes cutting down the tree, cutting it into pieces, and removing the debris. How complicated and time-consuming this process will be determines the price.

To find the right contractor, you may want to call multiple tree removal services and compare quotes on the project. Make sure to ask what exactly their price includes and what extra services or fees may come up.

Here’s a look at some key factors that can affect your tree removal quote.

Size of the Tree

Generally the larger the tree, the higher the cost. Price can make a particularly big jump when a tree exceeds 80 feet tall. At this point, the removal company will need a crane to access the highest branches, along with additional staff to work the machine. This can add as much as $500 to the job.

Here’s a look at tree removal price by tree size:

Size of Tree	Average Removal Cost
Up to 30’	$150–$450
30–60’	$450–$1,200
60–80’	$800–$1,500
Over 80’	$1,000–$2,000

A Tree That Has Already Fallen

Generally, a fallen tree will cost considerably less to remove than one that’s still standing, since the team doesn’t need to do any climbing or careful cutting. It’s just a matter of cutting it up, then removing the debris. You can expect to pay just $75 to $150 to remove a fallen tree.

That said, you generally don’t want to let a dying tree get to the point of falling, as it can do damage to nearby property and/or harm someone standing nearby.

Accessibility

If the tree you need to have removed is in a hard-to-reach or unsafe area, it can make the job harder for the team. This can add 25% to 50% to the total cost of removal. For example, a tree that has heavy branches near your home or is close to the local power lines takes more time and care to remove. A tree that is hard to get to due to obstacles can also be more costly. If possible, consider taking down fences or other structures in the way to reduce costs.

Number of Trees Needing Removal

The more trees you need to have removed, generally the higher the cost. However, you’ll typically save on the cost per tree, since the workers and equipment are already on your property. When multiple trees need to come down, some companies will charge by the acre instead of by specific tree count. Depending on how many trees cover the area, this can cost anywhere from $500 to $6,000 per acre.

Emergency Tree Removal

If a storm has caused a tree to lean perilously close to your home, you’ll want to bring in a tree removal company as soon as possible. Emergency tree removal generally costs more than standard tree removal, particularly after a storm, when these services are in high demand. A particularly urgent tree situation could run as high as $5,000.

Your homeowners insurance may cover the cost of tree removal relating to storm damage, so it’s worth checking your policy or calling them to find out. If a tree has already landed on your home or car, you may want to reach out to your insurer before getting it removed, since they may need to send an agent to assess the situation.

Cleanup and Debris Removal

Another factor that can impact the cost of tree removal is how you choose to handle the debris and stump. Options for debris removal typically include hauling away the tree (which runs around $70), putting it through a chipper so you can use it as mulch (on average, $95), or splitting it into firewood for your home (around $70).

If you don’t want to be left with a stump, the company will typically grind it up using a specialized stump grinder. The cost is around $100 to $150 for the first stump, and $50 for each additional stump.

Recommended: Five Curb Appeal Ideas for Your House

How to Determine If a Tree Should Be Removed

The biggest danger unhealthy trees pose is falling — onto people, homes, cars, or power lines. But even a healthy tree may need to be removed if it’s growing too close to a house or electrical wires. If you’re considering putting your home on the market, removing a threatening tree can give potential buyers one less thing to worry about.

Here are some telltale signs you might have to remove a tree:

•   It’s no longer growing leaves

•   Branches drop randomly (not related to high winds or storms)

•   It’s been significantly damaged by a storm

•   It has dead or dying branches

•   It’s growing too close to your home or other structures

•   The trunk is rotten and hollow

Generally, the first step is to hire a professional arborist to give you an opinion on your tree’s health. Some conditions may look concerning but not necessarily be damaging to the tree. Also, many cities require an arborist’s evaluation before you’re allowed to remove a tree.

Recommended: Top Home Improvements That Increase Your Home’s Value

How Much Does DIY Tree Removal Cost?

Tree removal can be dangerous and is generally best left to the professionals. If you have the experience and skills to do a DIY tree removal, however, you may be able to save some money. You’ll need several items for safety, including gloves, protective goggles, steel-toed boots, a hard hat, chainsaw chaps, and earplugs, which can run $200 to $300. In addition, you’ll need a chainsaw (which can run $50 to $150) and felling wedges (around $20 for six).

If you don’t have the necessary gear, you can expect to invest anywhere from $260 to $470 for a DIY tree removal. However, the risk involved may not be worth the cost savings. Tree removal professionals have access to tools and equipment that make the job significantly safer, including tree-rigging ropes, blocks and pulleys, hooks, ladders, lowering devices, and specialized saws.

The Takeaway

On average, homeowners pay $750 for a single tree removal. Your price will vary depending on the size of the tree, its accessibility, how many trees you’re getting removed, and what you want to do with the debris and stump.

A good first step is to hire an arborist to evaluate your trees and make an informed recommendation about how to manage any risk. If you learn that one or more of your trees needs to come down, it’s a good idea to get quotes from at least three tree removal companies. Generally, attempting DIY tree removal is not a good idea.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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A “secured” personal loan is backed by an asset, called collateral, such as a home or car. An unsecured loan, on the other hand, is not collateralized, which means that no underlying asset is necessary to qualify for financing. Whether someone should pursue a secured or unsecured loan depends on a number of factors, such as their credit score and whether they have assets to put up as collateral.

If you’re planning to take out a loan, it’s important to do your research and find one that best fits your needs and financial situation. Learn more about when someone can and should take out a collateral loan.

Why Secured Loans Require Collateral

With a secured personal loan, a lender is typically able to offer a larger amount, lower interest rate, and better terms. That’s because if the loan isn’t repaid as agreed, the lender can take possession of the collateral. This is not the case with an unsecured personal loan.

Collateral allows secured personal loans to be offered to a wider range of consumers, including those who are considered higher risk. The reason is that the lender’s risk is offset by the borrower’s assets.

Fixed Rate vs Variable Rate Loans

There are other types of personal loans beyond secured versus unsecured. One important distinction is whether a loan has a fixed or variable interest rate. A fixed rate is just as it sounds: The interest rate stays fixed throughout the duration of the loan’s payback period, which means that each payment will be the same.

The interest on a variable-rate loan, on the other hand, fluctuates over time. These loans are tied to a benchmark interest rate — often the prime rate — that changes periodically. Usually, variable rates start lower than fixed rates because they come with the long-term risk that rates could increase over time.

Installment Loans vs Revolving Credit

A personal loan is a type of installment loan. These loans are issued for a specific amount, to be repaid in equal installments over the duration of the loan. Installment loans are generally good for borrowers who need a one-time lump sum.

An installment loan can be either secured or unsecured. A mortgage — another type of installment loan — is typically a secured loan that uses your house as collateral.

Revolving credit, on the other hand, allows a borrower to spend up to a designated amount on an as-needed basis. Credit cards and lines of credit are both forms of revolving credit. If you have a $10,000 home equity line of credit (HELOC), for example, you can spend up to that limit using what is similar to a credit card.

Lines of credit are generally recommended for recurring expenses, such as medical bills or home improvements, and also come in secured and unsecured varieties. A HELOC is often secured, using your house as collateral.

What Can Be Used as Collateral on Personal Loans?

Lenders may accept a variety of assets as collateral on a secured personal loan. Some examples include:

House or Other Real Estate

For many people, their largest source of equity (or value) is the home they live in. Even if someone doesn’t own their home outright, it is possible to use their partial equity to obtain a collateral loan.

When a home is used as collateral on a personal loan, the lender can seize the home if the loan is not repaid. Another downside is that the homeowner must supply a lot of paperwork so that the bank can verify the asset. As a result, your approval can be delayed.

Bank or Investment Accounts

Sometimes, borrowers can obtain a secured personal loan by using investment accounts, CDs, or cash accounts as collateral. Every lender will have different collateral requirements for their loans. Using your personal bank account as collateral can be very risky, because it ties the money you use every day directly to your loan.

Recommended: Secured vs Unsecured Personal Loans — What’s the Difference?

Vehicle

A vehicle is typically used as collateral for an auto title loan, though some lenders may consider using a vehicle as backing for other types of secured personal loans. A loan backed by a vehicle can be a better option than a short-term loan, such as a payday loan. However, you run the risk of losing your vehicle if you can’t make your monthly loan payments.

Pros and Cons of Using Collateral on a Personal Loans

Using collateral to secure a personal loan has pros and cons. While it can make it easier to get your personal loan approved by a lender, it’s important to review the loan terms in full before making a borrowing decision. Here are some things to consider:

Pros of Using Collateral

•   It can help your chance of being approved for a personal loan.

•   It can help you get approved for a larger sum, because the lender’s risk is mitigated.

•   It can help you secure a lower interest rate than for an unsecured loan.

Cons of Using Collateral

•   The application process can be more complex and time-consuming, because the lender must verify the asset used as collateral.

•   If the borrower defaults on the loan, the asset being used as collateral can be seized by the lender.

•   Some lenders restrict how borrowers can use the money from a secured personal loan.

Qualifying for a Personal Loan

Common uses for personal loans include paying medical bills, unexpected home or car repairs, and consolidating high-interest credit card debt. With secured and unsecured personal loans, you’ll have to provide the lender with information on your financial standing, including your income, bank statements, and credit score. With most loans, the better your credit history, the better the rates and terms you’ll qualify for.

If you’re considering taking out a loan — any kind of loan — in the near future, it can be helpful to work on building your credit while making sure that your credit history is free from any errors.

Shop around for loans, checking out the offerings at multiple banks, credit unions, and online lenders. Each lender will offer different loan products that have different requirements and terms.

With each prospective loan and lender, make sure you understand all of the terms. This includes the interest rate, whether the rate is fixed or variable, and all additional fees (sometimes called “points”). Ask if there is any prepayment fee that will discourage you from paying back your loan faster than on the established timeline.

The loan that’s right for you will depend on how quickly you need the loan, what it’s for, and your desired payback terms. If you opt for an unsecured loan, it might allow you to expedite this process — and you have the added benefit of not putting your personal assets on the line.

Recommended: Is There a Minimum Credit Score for Getting a Personal Loan?

The Takeaway

Using collateral to secure a personal loan can help borrowers qualify for a lower interest rate, a larger sum of money, or a longer borrowing term. However, if there are any issues with repayment, the asset used as collateral can be seized by the lender.

The right choice for you will depend on your financial situation, including factors like your credit score and history, how much you want to borrow, and what assets you can use as collateral.

Looking for a personal loan that doesn’t require collateral? Check out SoFi Personal Loans, which have competitive rates and no-fee options. Apply for loans from $5K to $100K.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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It’s an honor to be asked to be a member of a friend’s or family member’s wedding, but it also comes with a cost. Between buying/renting attire, attending pre-wedding events, and purchasing gifts, it can run around $1,650 to be a bridesmaid and $1,600 to be a groomsman.

Just one wedding can take a bite out of your budget, not to mention the familiar scenario of attending several weddings in one year. We’ll help you understand the expenses that go into being a part of the big day so you can prepare and budget well in advance.

How Much Does It Cost To Be a Bridesmaid?

While the average bridesmaid can spend $1,650 to be a part of the bridal party, costs vary significantly depending on location of the wedding, number of events, and dress code. Before you agree to participate as a bridesmaid (or maid of honor), it’s important to consider what costs you may be responsible for.

Recommended: What Are Personal Loans Used For?

The Dress

Etiquette dictates that bridesmaids cover the cost of their dress, shoes, and any accessories the bride has selected for them to wear. According to The Knot’s 2023 Real Weddings Study (which surveyed nearly 10,000 couples who wed in 2023), the average bridesmaid dress cost is $130 per person.

You’ll likely also be responsible for any alterations, which can run from $45 to $150, depending on what adjustments are needed. While there are ways you can save — such as renting a dress — that decision is often not up to the bridesmaid.

Recommended: 2024 Wedding Cost Calculator with Examples

Hair and Makeup

Traditionally, if the bride requests everyone in the party have their hair and makeup done in a certain style, she will cover the cost. If, on the other hand, bridesmaids are given the option to opt in or do their own thing, the bridesmaids generally cover the cost of getting glammed up for the big day. The average cost of wedding hair for bridesmaids is $95, tack on another $90 for makeup.

Bachelorette Party

Bachelorette parties have gotten more elaborate in recent years. Typically, every attendant pays for their own expenses, while also splitting the cost to cover most, or all, of the bride’s expenses.

According to The Knot, the average cost of a bachelorette party in 2023 was $1,300 per person. Of course, the cost of attending a bachelorette party varies significantly depending on the type, location, and length of the event. Celebrations that last between one to two days cost, on average, $1,135 per attendee, while those that go on for three to four days can run $1,630. Also, the farther you need to travel to the event, the more you’ll need to spend. Guests who travel to the bachelorette party locale by plane spend an average of $2,000, while those who travel by personal car spend an average of $900 to attend the event.

Wedding Travel and Accommodations

For the wedding itself, the bridal party is typically expected to cover the costs of travel and accommodations, which can vary significantly depending on the location of the event and length of stay (with members of the bridal party possibly needing to arrive early or stay late).

On average, wedding guests who need to travel outside of their town or city to attend a wedding spend around $456 on travel and accommodations. You could end up spending significantly more if you’re covering travel costs for yourself and other family members, or if the wedding involves long-distance travel. When the wedding is local, travel costs are likely to be minimal.

Recommended: Guide to Saving Money on Hotels for Your Next Vacation

Gifts

Bridesmaids traditionally give shower and wedding gifts, which add to the cost of being in someone’s wedding. According to The Knot, the average bridesmaid bridal shower gift cost between $50 and $75, while the average bridesmaid wedding gift lands at around $170. A group gift may allow you to spend less while giving something nicer than you could afford on your own.

What Does the Maid of Honor Pay For?

Being the maid of honor generally doesn’t cost more than being a bridesmaid, but it does come with additional duties and a greater commitment of time. Generally, the maid of honor is there to assist with any tasks she can take off the bride’s to-do list. They may be involved in planning pre-wedding events and generally take charge of communicating with other members of the wedding party.

In some cases, the maid of honor might plan the shower and help cover the costs. However, these days, the cost of a wedding shower is more commonly covered by family.

Recommended: How to Save for Your Dream Wedding

What Do Groomsmen Pay for?

Groomsmen typically pay for their wedding attire, the cost to attend a bachelor party (which may include sharing the cost for the groom’s attendance), the cost to attend the wedding (which might involve travel and accommodations), as well as a wedding gift. Here’s a look at what it all adds up to.

Formalwear or Tuxedo Rental

Just like bridesmaids generally pay for their dresses, groomsmen typically pay for their wedding day clothing. This might be a suit, tuxedo, shirt and slacks, or another type of attire selected by the groom or couple. Typically the groomsmen’s attire is purchased or rented, but in some cases, a groom will let their wedding party choose from their own wardrobe, which can be a more affordable option.

If you need to rent a tux for the event, costs vary depending on what style, design, brand, and accessories you’ll need to wear. On average, you can expect to pay between $100 and $250 to rent a tux for the standard period.

Bachelor Party

Groomsmen normally take part in planning the bachelor party and may cover their own costs and the groom’s. According to a recent survey by The Knot (which included roughly 500 respondents who attended, or plan to attend, a bach party in 2023), the average cost of a bachelor party is $1,400 per person. The survey also found that the average bachelor celebration lasts for two days, and roughly one-fifth of attendees are flying to the party destination. Indeed, 29% of those surveyed are actually spending $2,000 (or more) to celebrate in a major metro city.

For guests who drove or were planning to drive to the event’s location, spending was less — averaging $1,000 per attendee.

Wedding Gift

Groomsmen are generally expected to give the couple a wedding gift, though they are not expected to spend more on a gift than other guests do. According to The Knot’s 2023 Real Wedding Guest Study, wedding party members spend an average of $160 on their gifts. If you want to save money, consider chipping in for a group gift with other wedding party members.

The Takeaway

It’s not unusual for a bridesmaid to spend $1,650, including the dress, bachelorette party, and gifts. Groomsmen may spend just a little bit less ($1600) for a rental tux, bachelor party, and wedding gift. Keep in mind, however, that the cost to be in someone’s wedding can run much higher or lower, depending on the location and style of wedding.

If you haven’t saved up enough money to be in a friend’s or family member’s wedding in advance, there are better options than throwing it all on a credit card. Personal loans are designed to help cover life’s big events. SoFi Personal Loans offer low fixed rates, no-fee options, and a quick and easy online application process. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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