Pools aren't cheap, and so you may need financing to pay for your new swimming hole. You generally have three options: a personal loan, a home equity loan or line of credit, or financing through your pool installer.

Picture it: a sweltering summer’s day. But instead of sweating it out, you’re lounging on your floatie, an umbrella drink in hand, toes skimming the water, sun rays on your face.

Sounds pretty great, right? But if you’re in the market for a pool, that daydream probably got a rude awakening when you realized the installation costs.

Pools ain’t cheap. But that’s where a pool loan can come in. Of course, we don’t advocate taking out financing for a pool if you can’t really afford it. After all, loans aren’t free money. So, if you haven’t already, do the math first with our pool loan calculator. It’ll show you how much you can expect to pay over time.

Already know you’re good to go? Here are three options for getting a pool loan.

1. Get contractor financing

Depending on the cost of the swimming pool you plan to install, you may be offered financing by the contractor/installation company. This form of credit isn’t actually extended by the swimming pool installer directly, but rather by a financial company they have a business relationship with.

It may be tempting to simply sign for the contractor financing out of sheer convenience, but the APR they offer you might not be competitive with other financing options out there.

2. Take out a personal loan

Personal loans are unsecured loans that typically come with a fixed term, interest rate, and monthly payment. They can be used for just about any purpose, including the installation of a swimming pool.

You can either manually compare a number of direct lenders to find the best personal loan rates you can get, or you can save some time by using a loan aggregator like Monevo or Fiona to run the comparison for you.

Read more: Best personal loans, compared

3. Tap into your home equity

You have two options here: a home equity loan or a home equity line of credit (HELOC).

A home equity loan is a type of secured loan in which you borrow against the amount of equity you have in you home, i.e., the amount of your mortgage you’ve paid off.

APRs offered for home equity loans are typically lower than the APRs offered for personal loans, which could amount to considerable savings in interest payments over the life of your loan.

Read more: What’s the difference between unsecured and secured loans?

home equity line of credit (HELOC), on the other hand, is similar to a home equity loan, in that both are secured forms of credit that tap into the equity a borrower has in their home. And like home equity loans, HELOCs usually come with far more attractive interest rates than personal loans.

The biggest difference between a home equity loan and a HELOC is that a home equity loan is distributed as a one-time lump sum payment. A HELOC is a form of revolving credit, meaning a borrower can use as much of the credit as they want, repay it, and then use the credit again (like a credit card).

Keep in mind that most HELOCs have variable rather than fixed interest rates, meaning their APR will fluctuate as the prime rate changes.

How to reduce monthly payments and borrowing costs

Aghast at the monthly payment and total interest that our calculator projects for your pool project? Summer bliss never comes cheap, but it can certainly be cheaper with the below adjustments.

Improve your credit score

The best rates and terms will go to borrowers who have the best credit scores. Though you may be able to get financing with a score as low as 600, the best financing deals come with a credit score above 700.

If your score isn’t where you need it to be to nab a low APR, you may want to concentrate on improving your credit score before you take out financing for your pool.

Read more: How to build credit the right way

Delay by one summer

If it’s spring and you want your pool to be installed in time for the coming summer, you’ll need to get the project going right away. That means you’ll need financing in the shortest amount of time possible, which could compromise your hunt for the best APR.

Consider putting the pool off until next summer, by which point you’ll know exactly what financing approach will be the cheapest.

Reassess long-term plans

Always ask this question before you even start looking at financing options for a pool installation: How long do you plan to live at the property where the pool will be installed?

If you’re planning to only live in the home for 7–10 years or so, you’ll probably want to pay off the loan rather quickly so you can fully enjoy the pool before you sell. And while fast-tracking the loan term will minimize the amount of interest you pay overall, it can substantially increase your monthly loan payments.

Sometimes it’s best to hold off on a pool installation until you’re definitely in your ‘forever home.’ Knowing that you’re not going anywhere makes a long-term length and low monthly payment more feasible, if that’s your payoff preference.

Loan amount

The price of your pool can vary substantially based on its style, size, and construction materials.

If you’ll have to make major lifestyle sacrifices to afford a high monthly loan payment, or you’ll need to pay an obscene amount in interest over an inordinately long loan term, you might want to downsize from ‘dream pool’ to ‘any pool will do.’ Above-ground pools are fractionally priced compared to their in-ground cousins.

The bottom line

In the likely event that you’ll need to finance your pool installation, you’ll want to have a thorough understanding of how that financing will affect your bottom line before you sign.

You can use our pool loan calculator to get a sense of the loan size that you’re financially comfortable with and capable of taking on. The calculator can project how your new summer splash will fit into your monthly and long-term financial plans.

Featured image: DisobeyArt/Shutterstock.com

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About the author

Total Articles: 144
Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed “slash worker” – accountant/blogger/freelance web content writer – on Out of Your Rut.com. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides “Alt-retirement strategies” for the vast majority who won’t retire to the beach as millionaires. He also frequently discusses the big-picture trends that are putting the squeeze on the bottom 90%, offering work-arounds and expense cutting tips to help readers carve out more money to save in their budgets – a.k.a., breaking the “savings barrier” and transitioning from debtor to saver. He’s a regular contributor/staff writer for as many as a dozen financial blogs and websites, including Money Under 30, Investor Junkie and The Dough Roller.