Personal Loans

Best pool loans of September 2023

By
Social Links for Hilary Collins ,
edited by
Social Links for Jared Hughes
Updated Aug. 30, 2023, 10:34 a.m. ET
A couple enjoys their new pool.
Shutterstock

Thinking of putting in a swimming pool? You’re not alone — according to end-of-year 2022 research from HomeLight, when money is no object, homeowners are more likely to choose their dream pool over other high-end home touches like luxurious walk-in closets, home theaters, or wine cellars. 

But for most of us, money is very much part of the decision-making process. We researched pool loans to find the best lenders based on interest rate, customer experience, maximum loan amount, and other important factors — here are our top choices.

Best pool loans

Methodology

Credible evaluated the best personal loan lenders for pool loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Credible’s team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

How do pool loans work?

Pool loans are a type of personal loan used to pay for a swimming pool. These loans often offer lower interest rates than credit cards, with Federal Reserve data showing that the rate for a 24-month personal loan from a commercial bank was 11.48% as of May 2023. Compare that to the average commercial bank interest rate on credit cards for May 2023, which was 20.68%. 

The total cost of your own pool project can influence the cost of your pool loan. Factors such as location (of both your home and the pool itself), the materials you use, the size of the pool, and any extra features you add on will impact the total price tag — and thus the amount of money you’ll need to borrow. 

Swimming pool installation costs in Miami average around $49,995, according to one contractor, while a Scottsdale, Arizona, contractor says its base price for a custom in-ground pool is $55,000. Though personal loan amounts usually top out at about $100,000, how large of a loan you qualify for will depend on a multitude of factors.

For example: Let’s say you get a quote from a contractor for $50,000 to build your dream pool. After loan shopping, you end up getting approved for and taking out one with an 8.00% APR and a 36-month term — meaning you’ll pay it back in monthly payments over a term of 3 years. 

Given those parameters, your monthly payment would be about $1,567, and the total interest you’d pay over the life of the loan would be about $6,405 — meaning your total cost to build a pool would be about $56,405.

Types of pool loans

There are two types of pool loans to consider:

  • Unsecured: These loans are based on your credit score, credit history, debt-to-income ratio (DTI), and other data lenders use to determine how likely you are to repay your loan in full and on time. 
  • Secured: These loans are backed by something you own, often a home, a car, or financial asset such as certificates of deposit (CDs) or stocks. If you default on your personal loan, the lender can take your asset as collateral. While securing your personal loan with collateral may get you a lower interest rate or a higher loan amount, be sure that you will be able to make your loan payments on time.

Check out: What are the common uses for a personal loan?

Pros and cons of pool loans

Here are some of the most important upsides and downsides to keep in mind.

Pros:

  • Can add to your home value: Especially in warm climates, an in-ground pool can raise your home’s overall value, meaning it may be a good investment in some scenarios. In Los Angeles, a pool can raise a home’s value by an average of $95,000, according to 2019 data from Redfin. (It’s important to note that this is not always the case: According to the same research, adding an in-ground pool in the Boston area can actually subtract more than $15,000 from your home’s value.)
  • Can build your credit history: Part of your credit score is determined by the number and types of debt you hold. Diversifying your credit “mix” can be beneficial, especially if you have little debt overall. However, your credit score is determined by a multitude of factors, so — especially if you already carry a lot of debt — your score could actually take a hit if you take out a pool loan. Additionally, making payments on time also helps build your score the most.
  • Can be more affordable and stable than other financing: Personal loans are often more affordable and predictable than credit cards, with fixed rates, set monthly payments, and a clear repayment term. 

Cons:

  • Can be expensive: Installing a pool is obviously not cheap, but the actual cost of the pool installation itself is just the beginning. Interest and fees from the loan, as well as maintenance and insurance costs once the pool is complete, can add up quickly. Make sure you understand all of the costs associated with both building and maintaining a pool.
  • Can be stressful: It’s not just the financial aspect of creating and keeping up with a pool that can stress you out. A 2019 study found that 85% of homeowners consider home renovations anxiety-producing, pointing to the planning process as the most stressful stage. Many cities and states require multiple permits for residential pools, as well as fences or enclosures around them, and it may be wise for you to carry additional insurance for any pool-related incidents. Putting in a pool requires a lot of preparation and paperwork, as well as cash.

How to qualify for a pool loan

Here are some things to keep in mind to boost your chances of being approved for a pool loan with attractive terms:

  • Credit score: This number reflects your history of making payments on time, how much debt you currently carry, how long your accounts have been open, and how many new applications for credit you’ve made. A high credit score signals to lenders they can lend to you without taking on a lot of risk, and they may offer you a lower interest rate.
  • Debt-to-income ratio: Your DTI shows how much of your gross monthly income goes toward repaying debt and gives your lender an idea of how much additional debt you can reasonably take on. A DTI of 35% or less for homeowners is considered good and preferable by most lenders, though some will accept higher. If you have a higher than desirable debt-to-income ratio, consider paying off some debt before applying for another loan.
  • Proof of employment and income: A steady paycheck will go a long way toward convincing a lender that if it lends money to you, you’ll be able to repay it on time. Many lenders will want to see a pay stub or similar proof of how much money you’re making and that you have consistently held a job. 
  • Amount of money: It’s possible to be approved for a loan, but for the loan amount to not match the amount you’re looking for. Make sure you’re not borrowing more money than you really need or can responsibly take on.

Read more: How to improve your personal loan application

How to apply for a pool loan

Here are the steps you should take to apply for a loan:

  1. Get a pool estimate: Get multiple quotes, but don’t necessarily go with the lowest bid. Make sure you’re working with a reputable and qualified contractor. 
  2. Prequalify with lenders: When you prequalify, you submit basic financial information to a lender and it gives you an estimate of how large of a loan you might qualify for and at what interest rate. Prequalifying generally requires a soft credit pull, which doesn’t affect your credit score (though submitting a formal application will trigger a hard pull, which does affect your score). It’s important to note that prequalification is not an offer of credit, and your final rates may be higher. Many banks, credit unions, and online lenders now offer quick and simple online prequalification processes — apply with multiple lenders so you can see all of your options. 
  3. Compare lenders: After you’ve prequalified with multiple lenders, compare the loan terms. Look at interest rate, fees, payment terms, lender reputation, and other important factors. 
  4. Pick the best option: After comparing loans, choose the one that works best for you. The loan payment should fit easily within your monthly budget, the interest rate should be competitive, and the fees should be reasonable. 
  5. Complete your application: Finalizing your application will often require government ID, proof of income, and other documentation. Once you’ve completed all the paperwork and been approved, carefully read the fine print before you sign the contract.
  6. Get your funds: Personal loans are often disbursed within a week of finalizing the application. Once the money arrives in your bank account, you can start the pool installation process. Don’t forget to start making your monthly payments according to your loan terms — consider automating them to ensure you don’t miss the due date.

Alternative options for a pool loan

Here are some other ways you could fund a pool:

  • Home equity loan: This can be a good choice if you have a lot of equity in your home. A home equity loan is a secured loan — meaning you can lose your home if you default — and they often come with fees and additional costs. This is an installment loan, with set monthly payments and a fixed interest rate.
  • HELOC: Like a home equity loan, a home equity line of credit (HELOC) is secured by your home, but instead of an installment loan, a HELOC is a form of revolving debt. Revolving debt works like a credit card, where you can borrow repeatedly up to a certain amount, and your monthly payments will vary based on the balance you’re carrying and the variable interest rate. 

However, unlike a credit card, lines of credit have a draw period, where you can take out funds up to a certain amount during a predetermined period, which is typically 5-10 years. Once the draw period is over, you’ll start making your monthly payments during the repayment period.

  • Cash-out refinance: This requires refinancing your mortgage for a larger amount, then pocketing the difference in cash. This type of loan also uses your home as collateral, and it can put your mortgage at a higher interest rate — proceed carefully and make sure you can handle the additional cost. 
  • In-house financing: You may be able to secure financing via your pool company. Some contractors and retail businesses offer in-house options to finance their products to customers via a partnership with a third-party lender. On the plus side, these loans can be unsecured, so an asset won’t be at risk if you default. But do your homework on both the contractor and its partner lender, as well as the actual terms of the financing they offer.

FAQ

What is the minimum credit score required to qualify for a pool loan?

The credit score required to qualify for a pool loan will depend on the lender. Many reserve their best rates for those with a FICO credit score above 670, but some personal loan providers have a minimum qualifying credit score of 550. You may be able to qualify for a pool loan with a credit score on the lower end if you have a cosigner or put up collateral, but it’s often best to wait and improve your credit score before taking on more debt.

Can I use a pool loan for other home improvement projects?

Yes, you can use a pool loan for other home improvement projects — generally speaking, you can use the funds from a personal loan for just about anything. But given the cost of debt, it’s best to use your pool loan for projects that add to the value of your home.

How long does it take to get approved for a pool loan?

The time frame for loan approval will depend on the lender, but generally ranges from one business day to a week or two.

Are there any prepayment penalties for pool loans?

Whether or not your pool loan comes with prepayment penalties will depend on your lender and the terms of your loan. Review your personal loan paperwork to see if your lender charges penalties for paying off your loan early.

Can I get a pool loan if I have an existing mortgage on my home?

Yes, you can get a pool loan if you have a mortgage on your home already. Unless your financial picture and credit score are bad enough to make lenders consider you a risky investment, personal loans are likely still an option for you. Review your credit score, debt-to-income ratio, and the amount of money you’ll need to borrow to determine how likely it is that you’ll qualify for a pool loan with a competitive interest rate.