Should You Finance Your Renovation?

By Realty Times Published Jan 23, 2024 06:30 am

You can finance your house, your car, your new teeth, and your college degree. We just got a quote from a company that offers financing on new board-on-board fences (But no thanks on the interest rate that is triple what we have for our mortgage—we’ll live with our existing fence a bit longer, thank you.).

If you’re looking to finance your renovation, you’ve got options there, too. Sure, you can take out a home equity line against your home once it appreciates in value, but you’ll have to pay interest. What if there was another option?

There is: zero interest credit at Home Depot and Lowe’s.

Move into a new home and hate your floors, your fridge, or your kitchen countertops? With credit from Home Depot or Lowe’s, you can finance your updates, breaking the cost into more doable monthly payments. So is it for you? Let’s find out by examining the pros and cons (also, you can check out the different Home Depot programs here and compare the offerings at Home Depot and Lowe’s here.)

Pro: A new kitchen!

Or new floors or a new bathroom or anything your home is dying for. If you don’t have another viable option for doing the renovations you need, this could be the answer. The amount of credit you are offered, the length of the term, and the corresponding monthly payments will obviously vary.

Pro: No interest

Interest makes what you purchase more expensive, which can make it take longer to pay off—especially if you’re only make the minimum payment every month. Remove the interest and you have…

Pro: More manageable payments

You may not want to shell out several thousand dollars for Quartz countertops, but a $200 monthly payment…that doesn’t sound so bad, right?

Con: More money going out

Of course, you’re probably not thrilled about committing to more money going out every month—especially since you may not be totally sure yet whether or not you’ll have discretionary funds left over at the end of the month—but are you more or less thrilled about those horrid countertops?

Pro: No need to save

If you’re the type that hates to wait and loves instant gratification, this will definitely be exciting.

Con: Delayed gratification feels good, too

Then again, it does feel good to set a goal and achieve it.

Con: Heavy-duty interest if you make a mistake

The biggest downside to no-interest credit offerings like these is the punishment involved if you don’t make good on your responsibilities. Miss one payment or make it late, and you’re busted. Not only will you immediately incur interest at whatever rate they pre-warned you about when you opened your account (and it can be obnoxiously high!), but interest will also now be owed back to the initial credit amount. Your monthly payment will jump dramatically, making it challenging to even get the balance paid off.