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You want to flip a house, but you don’t have enough money for a down payment — and your credit isn’t where it needs to be for a personal loan. Or, maybe you’re a small business owner who wants to own a piece of commercial real estate. People who are investing in real estate beyond their primary residence may consider a hard money loan as an option, especially if a traditional mortgage isn’t available.

A hard money loan is a short-term loan commonly used by investors, such as house flippers or developers, who renovate properties to sell. The loan typically uses the property as collateral. Hard money loans are usually funded by private lenders, individuals, or investor groups, rather than banks.

A hard money loan may make sense on paper, but because it typically has a shorter term than other types of loans, and interest rates can be high, paying back the loan can be challenging. Defaulting on a hard money loan could mean losing the collateral property.

What Is a Hard Money Personal Loan?

A hard money loan is a type of personal loan that uses collateral. While a mortgage is also a type of loan that uses property as collateral, a hard money loan is very different.

First of all, a hard money loan doesn’t come from a bank. It comes from a private lender, which may be a company or an individual. The loan will likely have a higher interest rate and a shorter payback period than a traditional mortgage.

The approval process can be much shorter for a hard money loan. While a mortgage may take weeks for approval, it’s not unusual to have cash in hand within a few days of a hard money loan application.

A hard money loan may be more lenient in terms of credit scores or assets than a traditional loan. This can be beneficial for people who want to flip a house or buy an additional piece of property, who may not have enough assets on paper to be approved for a traditional mortgage, or who need a larger down payment than they have.

How Do Hard Money Personal Loans Work?

Hard money personal loans are often advertised to — and used as a tool for — house flippers, but other people may pursue a hard money personal loan as well.

Let’s say someone wants to buy a house to flip, or a piece of land to use as a rental property. They may still be building their credit, or they may not have enough money for a down payment. They may have been turned down for a mortgage, or they may not want to apply for a mortgage, knowing that it’s a time-intensive process and their finances might not be as strong on paper as the bank would like.

In this case, the person might turn to a hard money personal loan. Individuals, groups of investors, or private companies may specialize in offering hard money loans. Terms vary but are often less than one year, compared to 20 or more years for a mortgage. But there is one constant: If you can’t pay back the loan, you lose the collateral, which would be the property.

Other things to be aware of regarding a hard money personal loan: Interest rates may be high, and the loan term is much shorter than a mortgage. This comes with a fair amount of risk.

Pros and Cons of Hard Money Personal Loans

As with any personal loan, it’s important to consider the pros and cons of the loan. It can also be a good idea to consider what-ifs and how you might pay back the money if the original plan doesn’t work. Here are some pros and cons to think about before applying for a hard money personal loan.

Personal Loans vs Hard Money Personal Loans

The primary difference between an unsecured personal loan and a hard money personal loan is that a hard money loan is secured. Both are personal loans, but using collateral for a personal loan means the loan is secured.

Collateral can be anything of value. But in the case of a hard money loan, it’s in the form of property. A personal loan typically does not require collateral. If you were unable to pay back an unsecured personal loan, the lender could not immediately take away your house. Both types of personal loans have specific terms and conditions, and both can provide cash relatively quickly. However, many unsecured personal loans are backed by a bank or other financial institution.

Is a Hard Money Personal Loan Right for You?

Hard money personal loans may be an option for certain financial needs. But, as with any personal loan, it’s important to weigh the pros and cons, and consider what-ifs. Questions to ask may include:

•   What other avenues can I follow to raise the money I need?

•   What happens if I don’t pursue this loan?

•   If I get this loan for a specific thing, what happens if it doesn’t work out the way I anticipated?

•   Can I afford this loan, including interest?

•   Could I afford this loan if my financial circumstances changed?

These questions can help you assess worst-case scenarios. You also may want to ask your potential lender any questions you have as well.

Hard Money Personal Loan Alternatives

There are potential alternatives to hard money personal loans. Some may require collateral, and others, like an unsecured personal loan, may not. Each comes with pros and cons. Your financial situation may also determine which loans you might be eligible for. If you’re building your credit, you may not be able to access certain loans.

Credit Cards

If you’re purchasing land or property, you likely need cash. But for other purchases, using a credit card could be an option. A credit card may work well for making periodic purchases but can be riskier when you’re looking for a large lump sum.

However, credit cards may have high, variable interest rates. Plus, the more of your available credit you use, the higher your credit utilization ratio, which could impact your credit score.

Recommended: What Is A Personal Line of Credit & How Do You Get One?

Unsecured Personal Loans

Can you buy land with an unsecured personal loan? You could. Generally, once you’re approved for a personal loan, you receive money in your account and can then use it for virtually any purpose. Some people use personal loans to buy land, pay for renovations, or other home improvement projects.

Keep in mind that an unsecured personal loan generally can’t be used for a down payment. And a personal loan may affect mortgage eligibility.

HELOCs

A HELOC is a type of revolving debt. For example, if you apply for a HELOC and are approved for $10,000, you can draw up to $10,000. Once that money is paid back, you can draw from it again for the set period of time defined in the terms of the loan.

A HELOC is a popular option for people who are doing home improvement projects. They may not need a lump sum of cash but may have ongoing expenses. Generally, interest rates on a HELOC are variable, not fixed.

Since a HELOC is a loan secured by the borrower’s home, there is a risk of losing the home if the loan is not repaid.

The Takeaway

For some people, hard money personal loans can help them achieve their real estate goals. But they typically have high interest rates and short payback periods, which can make them risky. It can be a good idea to carefully weigh the pros and cons of a hard personal money loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Do you need collateral for a hard money personal loan?

A hard money personal loan typically uses property as collateral. This could make obtaining financing easier for those with limited credit scores.

What are the typical interest rates on a hard money personal loan?

This type of loan typically has a higher interest rate and shorter payback period than a traditional mortgage. It also includes the possibility of losing property if you cannot fulfill the terms of the loan.

What are the alternatives to hard money personal loans?

There are potential alternatives to hard money personal loans, such as credit cards, personal loans, or HELOCs. Each of these alternatives has pros and cons to consider carefully.

Do banks offer hard money personal loans?

Hard money personal loans are funded by private lenders, individuals, or investor groups. They are not usually available from banks.

Photo credit: iStock/JLco – Julia Amaral

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.

SOPL-Q126-029

Renting out a room in your house can be a good source of extra income but generally isn’t something you want to do on a whim. From legal and financial considerations to aesthetics, there are lots of things to think about before offering the space to a potential housemate. Let’s take a look at some things to know before renting out a room in your home, so you can make a decision about renting with all the facts at your fingertips.

Is Renting Out a Room in Your House a Good Idea?

As more older Americans have decided to age in place instead of sell their home, there’s been a growth in the number of retirees interested in renting out a room in their home. Simultaneously, younger homebuyers (who came of age in the sharing economy) are facing higher purchase costs and may also be interested in taking in a tenant to help cover monthly mortgage payments. Indeed, for some homeowners renting out a room can be a good solution to financial challenges, provided an owner is willing to give up some privacy and convenience and can find a responsible renter.

What Are Some Room Rental Options?

Renting out a room in your house doesn’t have to mean having one long-term renter, although that’s certainly one way to go. Here’s a look at a few different rental options.

Short-term Rental

One option you might consider is offering short-term rentals through a service such as Airbnb or Vrbo. This could be a good choice if you live in an in-demand tourist area or have a home in an out-of-the-way locale that might attract someone looking for a place to relax and unwind. Some travelers prefer to stay in a home setting versus a hotel. Many local governments have taken steps to regulate these rentals, so check rules before proceeding.

Recommended: 25 Things to Know When Renting Out an Airbnb

Long-term Rental

Having a housemate who rents a room in your home for an extended period of time can be one way to have a steady income. It’s a good idea to have a formal rental agreement that clearly outlines expectations of both parties.

Furnished or Unfurnished Rental

Whether to offer a furnished or unfurnished space will probably be determined by the type of renter you’re looking for. If you live in a college town, prospective renters might not have any furnishings of their own, so will likely be looking for a furnished rental. As with a short-term rental mentioned above, a furnished rental will probably be a given. A potential long-term housemate, though, may have their own furnishings to bring to the space.

Financial Considerations When You Rent a Room in Your Home

For some people, the sole reason for renting a room in their house is to have extra income. With income, though, generally comes expenses.

Track Your Return on Investment

It’s not likely that a spare room is ready for a renter without some common home repair costs. Keeping a record of how much money you spend preparing the space will help you determine if you’re coming out ahead financially. It may take some time to recoup the money you spend before you make a profit. And it’s a good idea to have a record of any ongoing expenses you incur to make sure you’re charging enough rent to offset those costs. If you make upgrades to your property in preparation for a renter, try to focus on home improvements that increase value.

Recommended: What Is Considered a Good Return on Investment?

Don’t Forget Taxes

As you think about how to rent out a room, you’ll want to consider the tax implications. It’s wise to treat renting a room in your house as a business of sorts. The IRS considers the rental of part of your property, such as a spare room, as taxable income. And as with some business expenses, certain expenses related to this type of rental can be tax deductible. Any deductions claimed must be directly related to the portion of the home that is used for rental purposes.

If you deduct general household costs such as property taxes, the deduction is generally calculated as a percentage of the home’s total square footage. You may want to consult a tax professional who can answer detailed questions about rental income.

Setting Rent and Pricing Your Room

Looking at potential repair costs and tax liability will be important as you determine how much to charge for the space you are renting out. You’ll also want to look at similar rental offerings on local real estate sites. You may think the room in your home is worth about $1,500 a month, but if other listings are priced closer to $1,200, you may have to adjust your expectations.

Recommended: Cost to Repair a Plumbing Leak

Legal Considerations When Renting Out a Room in Your Home

It’s wise to look at your state’s landlord-tenant laws if you’re thinking about taking in a tenant. Some states are more landlord friendly, while other states have a wide range of protections for tenants, putting more limitations on landlords’ rights.

Even if you’re just renting out a room to an acquaintance, you’ll likely still need to adhere to regulations that apply to your situation. The Fair Housing Act protects potential tenants from discrimination except in limited circumstances. Shared housing is one of those circumstances because the government concluded that sharing one’s personal space has “significant privacy and safety considerations” in a U.S. Court of Appeals ruling.

Local Permits and Zoning Rules

Before you embark on your rental project, you’ll need to check your town’s rules around short- and long-term tenants. Some towns restrict short-term rentals, such as Airbnb, while others have rules around both short- and long-term tenants. While towns don’t typically prevent long-term rentals, they may have rent guidelines. Oregon and California have statewide regulations governing rent increases.

Other Rental Restrictions

It’s also a good idea to examine your neighborhood or homeowner’s association rules, if you have one. And if you rent your home or apartment, your lease may specify whether you’re allowed to sublease or if you’re restricted from doing so.

Your homeowner’s insurance policy may also include a clause related to leasing part of your home. Some companies may allow you to rent a room in your home without any change to your policy, while others may disallow it completely. There’s a chance you may see an increase in your premium, as well. To be on the safe side, it’s a good idea to let your insurance agent know of any change in your home’s occupancy. While you’re at it, check into what if any help you might get from your insurer if you encounter repairs related to your tenant. What is your plumbing issues coverage, for example?

Recommended: Condo vs. Townhouse

The Rental Agreement

Having a formal, written lease in place will go a long way in protecting both you and your renter. A thorough agreement might include:

•   The leasing period — it’s typical for a lease to be for one year, but if you’re renting a room to college students, you may consider a shorter lease for the duration of the school year. This section might specifically note the move-in and move-out dates.

•   Rent amount — including the due date, how you would like to collect it, and any late fees you might charge.

•   Security deposit — the amount and conditions for returning or withholding it at the end of the lease.

•   Utility costs — are they included in the monthly rent or will the renter be responsible for paying their share of the total bills?

•   Shared spaces — expectations around common areas like the kitchen, living room, and bathroom.

•   Guests — what if any restrictions do you want to put around guests, including overnight guests, and parties. Is there a maximum number of guests you will allow?

•   Pets — are they allowed or not, as well as policies about pet messes and noise.

•   Cleaning and maintenance — will the renter be responsible for regular house cleaning, including private and common areas, and home maintenance, inside or out?

•   Parking — if there is a parking space available, is it included in the rent or is it a separate charge?

Covering a wide variety of things in a rental agreement can go a long way in avoiding misunderstanding and miscommunication between you and your tenant. Having an attorney review the agreement is a good way to make sure you’re not missing important elements. Lease agreements are legally binding contracts when signed by both parties.

It’s also a good idea to do a walk-through of the room with the tenant before signing the lease and again before they move out. Any damage can be documented so it’s clear that the tenant isn’t responsible for that damage. (Some landlords require tenants to obtain rental insurance just in case.) A final walk-through can be done before the tenant moves out, during which any additional damage can be documented and accounted for.

What Are the Costs of Renting a Room in Your House?

You may encounter costs preparing a room to be rented as well as ongoing expenses related to having another person living in the home.

Preparing the Room for Rental

Safety for you and your tenant are important concerns. You may want to make sure doors and window locks are in good working order. Your tenant will likely want their room to be private, so a keyed lock on their door can go a long way to easing any concerns they might have about living in someone else’s home. Providing a combination safe for the tenant’s valuables might be a nice gesture.

Installing locks on doors to any areas you don’t want your tenant to have access to is another layer of safety you may want to consider.

Fixing loose railings, sticking doors or windows, flooring trip hazards, and doing other home maintenance that could mitigate safety issues is important in making your home and the individual room an attractive rental prospect for tenants.

You may want to make some cosmetic changes, too.

•   Painting the walls a neutral color may allow a prospective tenant to imagine their belongings in the room, instead of bright colors that might be a distraction to them. Using an easy-to-clean paint finish, like satin instead of flat, may also save you some effort after your tenant moves out.

•   If the room is carpeted, you might consider having the carpet cleaned, either professionally or using your own carpet cleaner. If the room is furnished with upholstered furniture, it can also be cleaned. Doing so will help the room look and smell fresh.

•   If you’re renting a furnished room, make sure the furnishings are clean and in good condition. Even used furniture can be presentable.

•   If the tenant will have a private bathroom space, the fixtures should be as modern as possible, but more importantly, clean and working. If the faucet drips, the bathtub leaks, or the toilet runs, make the repairs before renting the room.

•   Is the bathroom a shared space? Consider adding baskets or another type of storage for the tenant’s personal hygiene products. Making a cabinet available for their own use would be nice if there is space to do so.

•   Cleaning, decluttering, and updating other shared spaces such as the living room and kitchen can make your home look more inviting, possibly increasing your chances of finding a renter.

•   You might consider adding some storage space for a tenant’s use. It could be as simple as a stand-alone cabinet or a designated area in a basement or garage. The rental agreement could specify what isn’t allowed to be stored (e.g., no hazardous chemicals) and how much storage space is allotted. A prospective tenant might feel more comfortable storing belongings if the space is able to be secured.

Recommended: 20 Renter-Friendly House Updates

Increased Utility Costs

An extra person living in the house will likely increase utility usage. Costs for gas, electric, water, sewer, and other utilities will probably be more than you typically pay without an extra person in the house. You may want to calculate your average utility costs over the past year to have an idea what an extra person’s use might add to those costs.

Some landlords include the cost of utilities in the cost of rent, while others might require the tenant to cover a percentage of each monthly utility bill. When renting out a room in your house, it may not be convenient to have separate utility connections for a renter.

Covering the Cost of Making Your Room Rental Ready

Depending on how much work is needed, getting a room in your house ready for someone to rent could be a few hundred dollars or a few thousand dollars. You may be able to keep costs down by doing some of the work yourself, but you might want to hire a professional contractor for some tasks you feel comfortable doing on your own.

If you don’t have cash on hand to cover these costs, you could put the expenses on one or more credit cards. But because credit cards carry such high interest rates, you might want to avoid racking up a credit card bill you can’t pay down any time soon.

Financing options should be on your list of things to explore before renting out a room. Homeowners who have equity in their home might consider taking out a home equity financing such as a home equity line of credit (HELOC). These secured loans use your house as collateral. The application process can be lengthy and typically requires an appraisal of your home. Also, you risk losing your home if you don’t repay a home equity loan.

Another option is to apply for a personal loan. Personal loans are typically unsecured loans, which means you don’t have to put up any collateral to qualify for them. Many personal loans also have fixed interest rates. Home improvement loans are specifically designed for property upkeep and enhancements. For qualified borrowers, personal loans are usually approved and funded more quickly than home-equity-based financing, another plus.

Tips for Finding and Managing a Good Tenant

Finding the right person to share your personal space may take some time. You likely have certain things you’re looking for in a potential renter along with other things that might be deal-breakers. Maybe you’re looking for a non-smoker who has a solid rental history. A rental application is one tool that can help you find a housemate that fits the bill.

You may want to run a credit check and a background check on any applicants who are truly interested in renting a room in your house. These checks generally have fees associated with them, and it’s a good idea to specify in the rental application who will be responsible for paying for a credit and/or background check.

The applicant’s permission is required to run either of these checks and they are entitled to know if the results of either a credit or background check resulted in the denial of their rental application.

The Takeaway

From assessing your personal comfort level for sharing your space to formulating a rental agreement and making plans to pay for home improvements, there are lots of to-dos before you’re ready to rent out a room in your house. You can likely more than make up for upfront costs in rental income, but in the short term you’ll need to figure out a financing plan for your home repairs. A personal loan could provide the short-term infusion of cash you need to get a rental business off the ground.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Is renting out a room considered taxable income?

The money you receive from renting out a room is taxable income, according to IRS regulations. For this reason, it’s important to track both your revenue and your expenses associated with any rental property. Work with a tax advisor to make sure you capture any deductions you are eligible for, including depreciation and repair costs.

Do you need a lease agreement when renting a room?

Whether or not you need a formal lease agreement when renting out a room in your home will depend on your local or state regulations. But even if you aren’t required to have a lease when you rent out a room, it’s a good idea to have a legal document spelling out each party’s responsibilities in the arrangement. This protects you and your tenant and helps set clear ground rules for your landlord-tenant relationship.

How do you determine rent for a room in your house?

To set the rent for a room in your home, you’ll need to weigh your expenses associated with the home’s upkeep as well as the rental price of similar rooms in your local market. Ideally you will come away with a figure that is on par with market rates and that will cover your costs and allow for you to make some income on the deal.

Can you rent a room without being a landlord?

A landlord is defined as someone who rents out a room in a property that they own. So even if you are renting out a bedroom in a home where you live, you would be considered a landlord. If you are a renter and you sublease your room to someone else, you might not technically be a landlord (that would be the owner of the property with whom you signed a lease). But you’ll likely have obligations to the subtenant as well as to the building’s owner.

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.

SOPL-Q126-064

Finding out you need dental work can be scary — and scary expensive. Still, the pain and the price could get even worse if you put off getting care. And sometimes delaying just isn’t an option.

If you don’t have enough money stashed away in your emergency fund, and your insurance won’t cover all your costs, you may want to chew on the pros and cons of taking out a dental loan.

What Are Dental Loans?

Dental loans are personal loans that are used to pay for a variety of dental work and related expenses.

Whether you’re feeling overwhelmed by the upfront cost of a root canal or crown, or you expect to pay a substantial amount over time for braces, aligners, or implants, a dental loan can be a quick and convenient way to get the financing you need.

With a dental loan, you can borrow money to pay for your care, then make monthly payments until the loan balance is paid off.

How Do Dental Loans Work?

Dental loans are usually unsecured personal loans, which means you don’t have to put up collateral to secure the loan. Approval for a loan for dental work will be based on your creditworthiness.

If you qualify, you’ll receive a lump sum of money that’s to be repaid in monthly installments consisting of principal and interest. Since dental loans typically have fixed interest rates, your payments should be the same amount each month throughout the repayment period.

💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

What Can Dental Loans Be Used For?

You typically can use a personal loan to pay for just about anything as long as it’s legal and within the terms of your loan agreement.

Costs related to your dental care might include treatment — even for expensive elective or cosmetic procedures that may not be covered completely or at all by dental insurance — as well as over-the-counter or prescription medications you might require and transportation. You can even use the funds for the milkshake and soup you might need after your procedure.

Here are approximate costs for some common procedures that could be paid for with a dental loan:

Porcelain Crown

The cost of a crown can vary based on the materials used to make it, as well as the size, shape, and location of the tooth that’s being replaced. The average cost of an all-porcelain crown is $1,399. Dental insurance may cover some of that expense, unless the crown is strictly for cosmetic purposes.

Whitening

A basic teeth cleaning may be covered by dental insurance as part of your annual exam. But an in-office teeth bleaching (which can cost around $500-$600) or a laser whitening (which averages $792), likely won’t be covered by insurance.

Root Canal

The average cost of a root canal is $984, but it depends on how severe the infection is and which tooth is affected. Molar root canal treatment averages $1,337.

Aligners

Clear teeth aligners can be pretty pricey. For example, the average cost for a clear aligner is $5,108, but costs depend on how complex the orthodontic problem is. Your insurance provider may pay for some of those costs, but you should check your coverage before ordering.

Veneers

Veneers can range from $800 to $2,000 per tooth, depending on the type and how much prep work is involved. Because the purpose of veneers is cosmetic, the cost is generally not covered by dental insurance.

Typical Dental Loan Application Process

Your dentist may offer an in-house financing plan to help with costs — especially if they specialize in cosmetic procedures. Or the practice may partner with a lender who provides these types of loans. You aren’t obligated to use your dentist’s financing plan, but you may want to check out what the practice is offering. You can also go online to compare dental loan offers from traditional and online lenders.

Compare Offers: Choosing the Right Loan

When you start shopping for loans for dental work, you can go to individual lenders’ websites to see what they have to offer or use a comparison site to conveniently check out multiple lenders.

Getting prequalified with a few different lenders can help you get a good idea of what’s available that will suit your needs. Lenders typically use a soft credit pull during the prequalification process, so it won’t affect your credit score.

Here are a few things to watch for as you shop for financing:

Annual Percentage Rate

A loan’s APR tells you the amount you can expect to pay on top of the principal amount over the course of one year, including interest and any fees or charges you might incur. Because it gives you a complete picture of the cost of the loan (as opposed to just looking at the interest rate), the APR can be a useful tool for comparing various loan offers.

Recommended: APR vs. Interest Rate

Fees

Fees can add up quickly, and they can add to the cost of your loan. Some common fees to look out for could include an application fee, origination fee, late payment fee, returned payment fee, and a prepayment penalty. Low-fee or fee-free loans may save you money over the life of the loan.

Loan Amounts

Some lenders may have loan minimums that require you to borrow more than you need. Before you go loan shopping, you may want to get dental procedure cost estimates to get an idea of how much you’ll have to borrow. Then you can look for lenders who are willing to lend that amount.

💡 Quick Tip: Generally, the larger the personal loan, the bigger the risk for the lender — and the higher the interest rate. So one way to lower your interest rate is to try downsizing your loan amount.

Loan Terms

Another important factor to consider is the loan term, or how long you’ll be given to repay the money you’ve borrowed. Of course, you’ll want to find a loan term that feels comfortable (a longer-term can equal lower payments). But a longer term could increase the amount you pay in interest over the life of the loan. You may want to think about how the loan length could affect your future financial goals.

Eligibility Requirements

Before you settle on a particular personal loan for dental work, you may want to check out the lender’s eligibility requirements. In the process of estimating your personal loan rate, many sites will review your credit scores, credit history, income, and other personal financial information to determine whether you qualify for a particular interest rate or other loan terms.

Many lenders will accept a fair credit score (a FICO® Score of 580 to 669 is considered fair), but a good FICO Score (670 to 739) could qualify you for a more favorable interest rate and other terms. If you have a poor score (lower than 580), lenders may consider you to be a high lending risk, which could affect your eligibility. You may be able to find a loan, but the interest rate will likely be more expensive.

Approval and Funding Timeline

If you can’t get your treatment until you can pay for it — and you need it soon — a quick approval time and rapid funding could be important considerations. One of the major pluses of using an online lender can be the convenience and fast application time. If you have all your information ready, it can be easy to apply using an online form. And if you qualify, the money generally can be available within a few days.

Customer Service

Does the lender have a reputation for good customer service? You may want to check how various lenders deal with consumer questions and problems. At the same time, you can see if there are any perks to building a relationship with a lender that might benefit you in the future.

Applying for a Dental Loan

If you find a lender and loan terms you like, and you’re ready to apply, your next step will be to complete a formal application. You can expect to be asked to verify your identity, income, and current address, and it can make things easier if you gather up the necessary documents ahead of time. You’ll probably need your driver’s license, Social Security number, recent pay stubs and/or bank statements, and a utility bill or some other proof of address.

Once you apply, lenders usually do a hard credit check, which may cause your credit score to temporarily drop by a few points. The lender will evaluate your ability to repay the loan and, if you qualify, your loan will be funded.

Pros and Cons of Dental Loans

Whether you need money for a one-time emergency procedure or for a series of treatments that could add up to a big expense, a dental loan may be an option worth considering. Here are some pros and cons that could help you decide if a personal loan makes sense for your situation:

Pros

Convenient Online Comparison

Applying for a personal loan online can be convenient and quick. Many online lenders offer personal loans that can be used for dental treatment, so you can shop for the loan amount and terms that suit your needs. You may be able to get your approval within a few hours (maybe even a few minutes), and you could receive your money within a few days.

Competitive Terms

If you have a solid credit history, a stable income, and a Fair or better credit score, you may qualify for a competitive interest rate and a repayment period you feel comfortable with. (The interest rate on a dental loan is typically lower than the interest rate on a credit card.)

Fixed Payments

With a dental loan, borrowers typically receive a lump sum of money that is repaid in fixed monthly payments. This can make it easier to budget and manage your payments.

Cons

Fees and Penalties

Some dental treatment loans come with fees and penalties that can drive up the overall cost of borrowing. You may be able to keep your costs down by finding a low- or no-fee loan.

Alternatives May Cost Less

If you can qualify for a credit card with a low or 0% promotional rate for purchases, it may be a less expensive way to borrow money — at least for a while. Zero-interest credit cards charge no interest during an introductory period, which typically lasts six to 18 months. Paying the balance in full within the promotional period is essential to making the most of an offer like this.

Fixed Payments

Having a fixed monthly payment can make budgeting easier, but it doesn’t provide flexibility if you can’t make that payment for some reason. A different financing option, such as a credit card, might offer more adaptable minimum monthly payments.

Alternatives to Personal Loans

If you can’t afford the dental work you need, there are options besides dental loans that you might want to check out. A few to consider include:

Credit Cards

If you already have a low-interest credit card, you may want to compare the interest you’d pay if you used that card vs. the cost of a dental loan. Or you might want to consider the pros and cons of applying for a low or 0% introductory-rate credit card — if you think you can pay off the balance during the designated promotional period. If you end up using a high percentage of your available credit, however, your credit score could be negatively affected.

Dental Office Financing

Your dentist may offer some type of in-house financing to patients who can’t afford to pay upfront for the treatments they want or need. The practice might partner with a lender that offers loans for dental procedures, for example, or the dental office might suggest a medical credit card with a low or 0% introductory rate. These offers may be worth reviewing and comparing to similar options, as long as you’re clear on all the repayment terms.

Grants

There are grant programs aimed at helping seniors, adults, and children living in low-income households, and those who have special needs. The Dental Lifeline Network is a nonprofit organization that provides access to dental care for people who can’t afford it.

Some dentists may offer partial grants to attract new patients who need extensive and expensive treatment. Just be aware that the cosmetic dentistry grants you see advertised online are mostly scams. Red flags include high pressure tactics and the promise of automatic or guaranteed approval.

Explore Personal and Dental Loans with SoFi

A dental loan can be a quick and convenient solution if you need cash to pay for an unexpected dental procedure or an elective treatment you’ve been thinking about for a while (like braces, aligners, or implants). Whether you’re considering an expensive cosmetic procedure or you need a crown or root canal ASAP, SoFi may offer a personal loan that works for your unique financial situation.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What credit score do you need for dental implant loans?

Many lenders will offer a dental loan to a borrower with a fair credit score. A FICO Score of 580 to 669 is considered fair. But a good or better score could improve your interest rate and other terms. If you have a poor score (lower than 580), lenders may consider you to be a higher risk, which could affect your eligibility.

Can you get your teeth fixed with no money?

You may be able to find a research clinic or university dental program that provides free services to volunteer patients who need care. And some dental practices may occasionally offer free care to low-income patients. There are also grants that could help cover costs.

Can you put dental work on a credit card?

Yes, you can use a regular credit card or a medical credit card to pay for dental work. But if you come close to using up all the available credit on your card, it could affect your credit utilization ratio, which can have a negative impact on your credit scores. Putting dental work on a credit card can considerably add to the cost of your treatment if you are not able to pay it off quickly.

Photo credit: iStock/Sanga Park

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.

SOPL-Q126-026

Having to get a root canal is painful enough — but then comes the prospect of paying for it.

While the specific cost of a root canal will vary depending on your geographical location, your dentist, the location of your tooth, and other factors, it can easily cost as much as $2,000 or more if you don’t have insurance, and a few hundred dollars even if you do have coverage.

Fortunately, there are a variety of ways to finance dental work, making it possible for you to afford the care your teeth require. Here’s what you need to know.

What Is a Root Canal Treatment?

A root canal is a dental treatment that can remove infection and bacteria from the pulp beneath the hard exterior of a tooth. It’s a pretty common procedure, as millions of them are performed each year.

While root canals are often labelled as unpleasant, modern dentistry means this medical intervention can take place relatively painlessly while preserving your natural tooth, both for chewing and complementing your smile. If you’re in need of a root canal, you’re not alone.

Reasons for a Root Canal

There are many different reasons your dentist might prescribe a root canal, including:

•   Deep tooth decay

•   Large cavities affecting the nerve

•   Chips or cracks in tooth enamel

•   Dental trauma that damages the pulp

In any of these situations, bacteria may infect the pulp of the tooth and, if left untreated, spread to the surrounding structures, such as gums, other teeth, or even the jawbone. In extreme cases, severe dental infections can spread to the bloodstream and become life-threatening.

Taking good care of your teeth can help prevent these outcomes, but sometimes, accidents or predisposition to decay are added to the equation. In any case, if your dentist prescribes a root canal, it’s probably worth heeding their advice.

How Much Does a Root Canal Cost on Average?

While the cost of a root canal procedure varies depending on several factors, which we’ll dive into in more depth below, the cost can range from $620 to over $2,000 without insurance. With insurance, your bill could be considerably lower depending on your coverage and the extent of the procedure.

Recommended: Guide to Dental Loans

How Much Is a Root Canal With a Crown?

In many cases, you may also require a crown along with a root canal, which can help protect the tooth for future chewing and use. A crown can add a substantial amount to the overall bill: as much as $2,000 if you’re paying out of pocket.

Factors That Impact the Cost of a Root Canal

Here are some factors that can affect the cost of your root canal treatment.

Insurance Coverage

Obviously, the cost of any dental or medical procedure is likely to be higher if you don’t have insurance coverage or if your provider is outside of your insurance company’s network. Because root canals are usually medically necessary, as opposed to just cosmetic, it’s likely that your insurer will cover at least a percentage of the procedure.

Tooth Location

The location of the infected tooth in your mouth can also have an impact on the total cost of the root canal. That’s because certain teeth are more difficult for dentists to work on than others.

For instance, molars, which are set more deeply in the mouth, are harder to reach and thus command higher costs for dental procedures. Bicuspids, or premolars, and front teeth needing root canals are likely to cost the least.

Geographical Location

Like most other goods and services, the cost of a root canal can vary significantly depending on the local economy or the prices set by the dental professional you choose.

Type of Dentist

While most general dentists can perform a simple root canal, some teeth with more complicated infections might require an endodontist, who specializes in dental pulp (the part that’s treated during the procedure).

Specialist root canal treatment may be more expensive than treatment from your general dental professional, partly due to the use of high-tech equipment such as an ultrasonic needle or water laser.

Root Canal Complications

Although they’re very common and generally safe, like most other medical procedures, root canals still come with some risk.

For example, the root canal can fail due to a breakdown of materials or the provider’s failure to remove all of the bacteria during the procedure. In addition, sometimes the tooth becomes slightly discolored after the procedure due to bleeding on the inside of the tooth.

Ways to Pay For a Root Canal

Although root canals can be expensive, there are many ways to pay for this vitally important procedure without chewing through your savings.

Dental Insurance

Carrying dental insurance is a great way to lower the cost of procedures such as a root canal — but keep in mind you’ll be responsible for monthly premiums as well as potential copay or coinsurance costs.

Health Savings Account

A health savings account is a tax-incentivized account that can help you save and pay for out-of-pocket medical expenses. However, you must have a high deductible health plan to contribute to one.

Personal Loan

Personal loans are a type of financial product that allows you to borrow money for almost any purpose, including dental or medical care. Because they’re unsecured, meaning no collateral is required, they tend to have higher interest rates than auto loans or mortgages — but the rates can be lower than those offered by credit cards.

As with most financial products, your specific rates and terms will vary depending on your credit score and other financial aspects. While rates may be higher, there are still personal loans for low-credit borrowers — and taking one out may still make more financial sense than decimating your emergency fund or putting the procedure on credit.

Credit Card

Although they usually have fairly high interest rates, credit cards are another option for paying for necessary medical interventions in a pinch. If you can qualify for a credit card with a 0% promotional interest rate, you’ll have some time to pay the balance without interest if you can pay it off before the promotional period ends.

Recommended: Can Medical Bills Affect Your Credit Report?

Other Dental Procedures a Personal Loan Can Cover

Along with root canals, personal loans can be used to cover other common dental procedures, including:

•   Periodontal surgery

•   Dentures

•   Tooth bonding

•   Wisdom tooth removal

•   Dental fillings

The Takeaway

Having a root canal can be an important medical intervention to preserve your health and your affected tooth. Although the procedure is expensive, there are ways to pay for it that won’t add financial stress to your dental pain.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much is a root canal and a crown?

A root canal procedure can range from around $600 to $2,000, and a restorative crown can add another $2,000 to the total cost. Costs vary depending on which part of the country the procedure is performed in and which tooth is being treated.

Why is a root canal so expensive?

Root canals are performed by licensed medical professionals who use specialized equipment. More complex situations may need to be treated by an endodontist, a dental specialist who has completed additional years of training beyond dental school.

What does a root canal cost without insurance?

Depending on a variety of factors, the full, out-of-pocket cost of a root canal without insurance may range from $620 to over $2,000.

Photo credit: iStock/AndreyPopov

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.

SOPL-Q126-037

Loans have become an integral part of American financial life. We need a mortgage to buy our first home and an auto loan to purchase a car. More recently, people are turning to personal loans to pay surprise bills and avoid high-interest credit card debt. But just because you need a loan doesn’t mean a lender is going to give you the loan — and interest rate — you want.

If you’re struggling to qualify for a loan, a friend or family member may be able to help by becoming a co-borrower. By leveraging their income, credit score, and financial history, you may qualify for better loan terms. Let’s dive into the details.

Understanding Co-Borrowers

As you’re considering your options, a natural first question may be, what is a co-borrower? Essentially, a loan co-borrower takes on the loan with you, and their name appears on the loan alongside yours. They will be equally responsible for paying the loan back and have part ownership of whatever the loan buys. When you take out a mortgage with someone, the co-borrower will own half the home.

Spouses often co-borrow when buying property or taking out a personal loan for a home improvement or remodeling project. In other circumstances, two parties become co-borrowers so they can qualify for a larger loan or better loan terms than if they were to take out a loan solo.

Having a co-borrower can help two people who both want to achieve a financial goal — such as first-time homeownership or buying a new car — put in a stronger application than they might be able to do on their own. The lender will have double the financial history to consider, and two borrowers to rely on when it comes to repayment. Therefore, the loan is a less risky prospect for the lender, which may translate to more favorable terms.

Recommended: All About Variable Interest Rate Loans

Qualifying as a Co-Borrower

If you’re planning to have a co-borrower on your personal loan application, it helps to understand what criteria you both must meet in order to be accepted by the lender. Let’s take a closer look at common factors that lenders consider.

Credit Score

A credit score can have a significant impact on whether your loan application is approved and what terms you’re offered. There’s no magic number, but generally speaking, lenders prefer to see a score of 620 or higher. You and your co-borrower may want to check your credit scores at no cost before you apply.

Proof of Income and Employment

To help determine whether co-borrowers can afford loan payments, a lender will likely want to see proof of a stable income and employment. You may both be asked to provide recent pay stubs, tax returns, and bank statements. You might also be asked to show a letter from your employers verifying your employment status, how long you’ve both been employed, and your salaries.

Debt-to-Income Ratio

Debt-to-income ratio, or DTI ratio, is a comparison of your monthly debts to your gross monthly income (before taxes). Lenders use this information to help determine how risky it would be to loan money to a borrower. It can affect your ability to borrow money and the interest rate you’ll receive. Generally, lenders like to see a DTI that’s no higher than 36%, though there may be some wiggle room.

In addition to the above, lenders also usually consider:

•   Financial history. This includes recent bankruptcies, judgments, and liens.

•   Age. Many lenders have a minimum age for co-borrowers, typically 21 to 25 years of age.

•   Citizenship. Co-borrowers generally must be either citizens or permanent residents of the U.S.

Co-Borrower Process

If you’re applying for a loan with a co-borrower, the application process is fairly similar to the one you’d follow if you were applying alone.

A good first step is to reach out to your lender and start the prequalification process. If your co-borrower has a strong credit profile, that could improve your odds of qualifying for better rates and terms.

Next, you and your co-borrower will need to complete the loan application. You’ll also both undergo credit checks, and the lender will evaluate your finances. You may be asked to provide documentation such as pay stubs, bank statements, or tax forms.

Within a few days or so, you’ll find out if you’re approved and what your loan terms are. Once you agree to the terms, your loan funds will be disbursed, usually within a week. Your lender will also share details about how to make monthly payments.

Co-Borrower vs Cosigner

A cosigner plays a slightly different role than a co-borrower. A cosigner’s income and financial history are still factored into the loan decision, and their positive credit standing benefits the primary applicant’s loan application. But a cosigner does not share ownership of any property that the loan is used to purchase, and they will help make loan payments only if the primary borrower is unable to make them.

Cosigning helps assure lenders that someone will pay back the loan. Typically, a cosigner has a stronger financial history than the primary borrower. This can help someone get approved for a loan they might not qualify for on their own or secure better terms.

No matter which route you choose, there are potential credit implications to keep in mind. For example, when you apply for a loan, the lender will likely do a hard credit pull. This may cause credit scores to temporarily dip for you and your cosigner or co-borrower.

Both parties may also see a drop in their credit score if monthly payments are late or missed altogether. (And remember, cosigners will be on the hook for making loan payments if the main account holder can’t.) On the flip side, on-time payments can help boost or build credit scores.

When should you choose a cosigner vs. a co-borrower? The answer depends on your situation and goals. If you intend on sharing ownership of whatever you buy with the loan, then a co-borrower may be a good choice. If you simply need someone with a strong credit history to bolster your loan application, then consider using a cosigner.

Recommended: What Is Revolving Credit?

The Takeaway

Taking out a loan is a big decision, and doing so with a co-borrower carries additional risks. A co-borrower is a partner in the loan and any property the loan is used to purchase. If one borrower cannot make their payments, the co-borrower will be on the hook for the full amount. But if both parties can come to an agreement about how they’ll handle potential financial hardships, co-borrowing can have major benefits. By pooling their income and debt, borrowers may lower their debt-to-income ratio and qualify for a mortgage or personal loan with a lower interest rate and better terms.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Are co-borrowers equally responsible for a debt?

Co-borrowers are equally responsible for the debt. If one borrower cannot pay, the other must cover the entire amount.

Does a co-borrower increase your approval odds?

A co-borrower with a higher income or better credit score can help you qualify for a loan and potentially secure better interest rates.

Does a co-borrower have ownership rights?

A co-borrower typically has ownership rights to the asset being purchased. The co-borrower is a joint owner on the title and has a legal stake in the asset.

Photo credit: Stocksy

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.

SOPL-Q126-045