Is Financing Landscaping With a Personal Loan a Good Idea?

Nothing speaks to pride of homeownership more than a well-landscaped yard. Aside from improving the curb appeal of any home, the right landscaping can turn a home into an oasis enjoyed throughout the year; but it can also get expensive. The average U.S. household spends about $3,300 to finance landscaping; but if you live in California, the average cost spikes to $6,000. And that doesn’t include large landscape expenses such as installing a lawn or a patio. The challenge for most homeowners is in creating a pleasing landscape while controlling costs. As most homeowners find, it’s easy for costs to get out of control.

The Challenge of Landscaping Cost Control

That was the challenge Ken and Darla confronted when they embarked upon landscaping their first home. They designed it themselves, down to the shape of their lawn and the variety of plants and flowers. The initial quote their landscape contractor gave them came in at $6,000. Once the project was underway, they began to see where further improvements could be made, so they made incremental changes to their plans, getting quotes for the additional work along the way. First they decided they should have an automatic sprinkler system installed at an additional cost of $2,200. Then they wanted to replace their bland concrete walkway with a decorative stone path, which added another $800 to their cost.

By the time they added landscape curbing, a patio overhang, ground lighting, and several other additions, their cost nearly tripled to $17,000. They felt they controlled themselves, because if they had done everything they wanted, the cost would be closer to $25,000. Still, they were in need of financing. Originally, they had planned to take out a home equity loan, but the higher cost would increase their loan-to-value ratio too much. They were cognizant of the fact that landscaping doesn’t add proportionate value to the house, so they wanted to consider other landscape financing options. Fortunately, for landscaping projects there are several to choose from.

Zero Interest Credit Card

Having recently bought their home, Ken and Darla were getting a slew of 0% interest credit card offers in the mail. The obvious appeal of these credit cards is the possibility of paying for landscaping costs with zero interest costs. However, the full balance would need to be paid within the introductory period or they would be charged double-digit interest on the original balance. For a card with an 18-month introductory period, their monthly payment would be nearly $1,000 a month, which wasn’t in their budget.

Landscaper Financing

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Some landscape companies partner with a bank or lender to offer in-house financing. These are typically set up as installment loans and, because the landscape company acts as a middleman, the interest rates on these landscaping loans tend to be higher than loans obtained directly from a lender. A typical landscaping loan rate for a creditworthy borrower would currently be 9% to 10%. These loans tend to be packaged, so they don’t offer much flexibility in terms.

Other landscape companies may partner with third party lenders, not as middlemen, but simply as a referrer. Lenders such as LightStream and LendingClub offer loans for landscaping and are often recommended by landscaping companies. You can go directly to the websites of LightStream, LendingClub, or any number of the top online lenders to arrange your own loan.

Personal Loan

With the advent of the Internet, online lenders have proliferated, offering low-interest personal loans with flexible terms. These landscaping loans don’t require any collateral, which keeps your house out of harm’s way should you default. The growing competition of online lenders has driven loan rates down, with some as low as the rates on a home equity loan. With a range of terms to choose from, it’s easy to construct a landscaping loan that fits within your budget.

For Ken and Darla, a couple with excellent credit and a monthly budget of $350, they could qualify for a 60 month, 6% loan with a monthly payment of $328.

Bottom Line

The biggest consideration for Ken and Darla is how long they plan on staying in their home. If they know with a high degree of certainty they will remain there for more than five years, a personal loan might make sense. It is important to keep in mind that, as an investment, landscaping doesn’t add the kind of value that can return anywhere near full investment upon the sale of the house. However, in terms of curb appeal and attracting buyers, it can be extremely valuable.