Financing Options for Emergency Plumbing Expenses
Though no one wants to deal with plumbing emergencies, they do happen. Paying for these can be difficult, especially if the damage is widespread or requires major repairs. Fortunately, there are a variety of payment options available.
Whether it’s a water-filled basement, a frozen pipe, or a busted sewer line, for many home owners, plumbing disasters are as unexpected as they are expensive. Unfortunately, while many home repairs can be put off, emergency plumbing problems can leave you in between a wet rock and a financial hard place.
One of the main reasons plumbing emergencies cost so much is because of all the hidden costs that stream in with them. Plumbing in general usually requires an expert, and it’s rarely just the plumbing that needs to be addressed. Instead, most emergencies come with damage to flooring, walls, yards, etc., not to mention any personal possessions that were in the way.
Despite homeowners insurance, not all plumbing emergencies are always covered, leaving frustrated home owners left to foot the bill. Fortunately, there are many financing options available to help you dry out and clean up.
There are several organizations, including independent lenders and plumbing companies, that offer loans specifically designed for emergency plumbing repairs. Typically, these loans do not require a credit check and have no upfront costs. Some plumbing companies also offer same-as-cash financing options that expire after a specific promotional period (such as 12 months).
Though homeowners may find this option to be the most hassle-free and, in some cases, most affordable option, it’s important to understand the terms and conditions associated with the financing, as missed payments or balances that extend past the agreement terms can be subject to high interest rates, which will quickly accumulate.
Depending on your credit score, personal loans can be a quick and affordable way to access cash in the case of a plumbing emergency. If you already have a personal loan, you may be able to leverage existing funds to pay for the repairs, or you can inquire about extending your loan. If not, there are a variety of lenders that offer quick decisions and access to cash in as few as one to three days.
Even though you need the cash fast, it’s helpful to shop around for your loan, comparing interest rates and terms before you apply. Since interest rates and repayment terms vary, it’s essential to consider monthly payments and overall interest accrued through the loan term. Additionally, be conscious of personal loan fees (origination and application, for example), as hidden costs can quickly turn a financial emergency into a costly blunder.
Though some may find personal loans to be a feasible option, those with below average credit may be subject to excessive interest rates. As such, those with low credit scores may want to consider an alternative lending option first.
Home Equity Line of Credit or Home Equity
Though not ideal, if you have enough equity in your home (typically 15% to 20%) and you have a major plumbing disaster on your hands (thousands of dollars in damage), you may want to consider a home equity loan or line of credit. This borrowing method will effectively leverage your existing equity in exchange for cash.
The good news is that you can generally secure quick credit through a home equity loan. However, keep in mind that these are secured loans, meaning your house will act as collateral should you fail to make payments. As such, it’s imperative that borrowers are cautious when entering into a home equity loan agreement, making sure they can afford each anticipated payment for the duration of the loan term.
Credit Card Payments
Thanks to advances in payment technology and consumer reliance on credit and debit cards, many plumbers now accept credit card payments for services rendered. If you have available credit and a history of responsible credit management and can’t or don’t want to consider other financing options, a credit card can be a viable option.
If you are considering a credit card, there are a few things to keep in mind. Credit cards, even for those with prime credit scores, often carry higher interest rates, with the average interest rate hovering around 16% and some consumers paying over 20% interest. When paired with an existing balance or future usage, this can quickly leave you with mounting interest.
Thus, it is recommended to only use credit cards for repairs that are less than $500, and even then, only using one if you’re confident you can responsibly manage and pay off the debt quickly.
Though no homeowner wants to deal with the aftermath of plumbing emergencies, they do happen. Paying for the unexpected can be difficult, especially if the damage is widespread or requires major repairs. Fortunately, there are a variety of payment options available.
Which payment option is best?
That all depends. If your plumber or plumbing company offers easy and affordable financing options, then your quest for financing may end there. However, if they do not, you may need to turn to personal loans, or in cases where damages lead to a significant expense, a home equity loan or line of credit. Of course, if you’re in a pinch and can quickly pay down the debt, a credit card may prove to be the answer.
Author: Jeff Gitlen
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