Shed Loans: Compare Your Financing Options

As a homeowner, you may need a spot to store your lawnmower, gardening shears, power tools, or other outdoor equipment. Sheds offer a home base for your hobbies, whether that’s landscape maintenance or raising chickens.  

There’s just one problem: Sheds are expensive, with an average cost of $2,500. If you don’t have extra cash on hand, you may consider spreading out the cost over time with shed financing. 

Here, we’ll review the range of pricing factors and your shed financing options.

Can you finance a shed?

Yes. If you can’t pay off the full price of the shed upfront, you have options for financing. Loans, for example, offer funding that you’ll pay back over a certain number of months or years, along with interest and any fees. 

Opening a line of credit may also be an option. With a line of credit, you can take out what you need and pay back only the amount you borrow. As with a loan, you’ll also pay back interest and fees. 

To borrow a loan or open a line of credit, you must meet a lender’s requirements for credit and income. Financing options may be available even if you have bad or fair credit, but a good credit score—at least 670—will help you access the lowest rates and most affordable financing options. 

How to finance a shed: 4 types of loans

Once you have an idea of the amount of financing you need for your shed, you can evaluate your options. Consider the following four types of shed loans and their benefits and drawbacks. 

Here’s a list of each type, in order from most to least recommended by a Certified Financial Planner. Read on for more about each type of loan. 

Loan type	Best for
Personal loan	Fast funding
Home equity loan	High loan amounts
Home equity line of credit	Flexible borrowing
Manufacturer financing	Weak credit

Personal loan

You can use personal loans for almost anything, including financing a shed. Because you get them in a single lump sum, personal loans, sometimes called home improvement loans, can be a terrific option if you’re making a one-time payment to a shed installation contractor or when purchasing materials or a prefab kit all at once. 

Most personal loans are unsecured, so you’ll likely pay higher rates than a secured loan (such as a home equity loan or line of credit). But you won’t risk having your collateral—your home, car, or investment account, for example—repossessed if you default on the loan, and these loans are often faster and easier to get. Some lenders can fund your personal loan in just a day or two. 

As with any loan, you’ll qualify for the best rates with a good credit score of at least 670. However, personal loans can be tougher to qualify without good credit unless you use collateral or a creditworthy cosigner (if either option is available). You may pay higher fees and interest rates if you’re approved for a bad-credit loan.

Best for…	Not a good option for…
✅ Borrowers with good credit	❌ Obtaining the lowest rates possible
✅ Fast funds	❌ Borrowers with weak credit or unstable income
✅ Paying for shed costs all at once	❌Individuals who can pay off their expenses in a short period and could benefit from a credit card with an introductory 0% APR offer

Many banks, credit unions, and online lenders offer personal loans you can use to buy a shed. Here are our top recommendations for personal loan providers with competitive rates and flexible repayment terms:

• SoFi – Best for good credit
• Upgrade – Best for fair credit
• Credible – Best marketplace

Best for good credit – SoFi

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LendEDU rating: 5.0 out of 5

• Higher loan amounts with a minimum of $5,000
• A low-cost option due to no required fees and discounts for autopay
• Provides extra membership benefits for high customer satisfaction

SoFi is one of the best personal loan lenders due to its low rates, lack of fees, and high customer satisfaction. Its interest rates (APRs) range from 8.99% to 29.49%, and repayment terms span two to seven years. SoFi doesn’t require origination fees, but you can opt to pay one in exchange for a lower interest rate. 

The downside is that SoFi’s minimum loan size is higher than the cost of the average shed. If you don’t need to borrow at least $5,000, it may not be the right choice. You can, however, combine the loan funds with other uses, such as consolidating higher-interest debt. 

You’ll also need good credit to qualify for a personal loan from SoFi. It requires a credit score of 680 or higher. You can see whether you prequalify on SoFi’s website, an option that lets you check your rates without affecting your credit. 

Best for fair credit – Upgrade

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LendEDU rating: 4.9 out of 5

• Easy application process and quick funding
• Offers more realistic loan amounts for most shed projects
• An option for fair-credit borrowers, with a soft credit check that won’t lower your score

Upgrade is a suitable lender if your credit is less than perfect because its minimum credit score requirement of 580 is lower than many other lenders. It’s also a solid all-around choice for financing a shed because its minimum loan amount of $1,000 aligns with the average shed cost.

However, because Upgrade also offers personal loans to those with fair credit, it tends to charge higher rates and fees, which can boost your loan’s overall cost. Annual percentage rates can range from 8.49% to 35.99%, and these include an origination fee between 1.85% and 9.99% of your loan amount. 

You can get an idea of how much more expensive it will be by using a personal loan calculator. Upgrade can fund your loan in as little as a day and lets you pay it off over two to seven years. Like SoFi, Upgrade lets you check your rates through prequalification on its website. 

Best marketplace – Credible

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LendEDU rating: 5.0 out of 5

• Extensive network of lenders
• Expedited prequalification process
• Options for diverse credit scores

One of the top places to search for your shed loan is Credible. It boasts an expansive network of lenders, assuring a suitable match for most loan seekers. Credible’s quick prequalification process makes it easier to access loan options without damaging your credit score. Its partners’ rates (APRs) range from 7.49% to 35.99%.

The other advantageous feature of Credible is its wide range of credit score options. It acknowledges that not everyone has a perfect credit history, making it an excellent choice for those with less-than-optimal scores. This makes the site appealing to customers who might struggle to find a loan elsewhere.

Home equity loan

Home equity loans also give you money as a single upfront payment but may offer lower interest rates than a personal loan. But compare the costs carefully because home equity loans tend to have more fees than personal loans. These fees can total 2% to 5% of the loan amount. 

Home equity loans are based on a percentage of your home’s value, which serves as the loan collateral. Home equity is how much your home is worth minus the remaining value of your mortgage. In other words, it’s how much of your home you “own.”

Home equity = Value of your home – Remaining value of your mortgage

If you don’t have much equity built up in your home, you may not be able to borrow. Lenders typically require at least 15% equity before they’ll consider you for a loan, but some lenders allow you to borrow if you have less. 

Best for…	Not a good option for…
✅ Borrowers looking for the lowest possible interest rates	❌ Obtaining quick shed financing funds
✅ Homeowners with 20% or more equity in their homes	❌ Borrowers who don’t want to put their homes at risk of foreclosure if they default on the loan

What our expert thinks

Erin Kinkade

CFP®

Using a HELOC or home equity loan to purchase a shed could improve your home as long as it is kept up, maintained, and aesthetically pleasing—and you might be able to deduct the interest from your taxes if you use the funds to improve your home and itemize your deductions (rather than filing with the standard deduction). But I think whether using home equity for this purchase makes sense depends on the purpose of the shed. If the shed is for an individual to become an entrepreneur or create an area for DIY projects, along with other gratifying hobbies, purchasing a shed using home equity could make sense. 

Here’s more about the top lender we recommend for borrowing a home equity loan.

Best for accessing your equity – Spring EQ

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LendEDU rating: 4.6 out of 5

• Faster-than-average funding time
• High loan amounts with the potential to borrow up to 95% of your home’s equity
• Lower minimum credit score requirements make it an option for fair-credit borrowers

If you’re planning a top-of-the-line shed purchase and want to use your home equity, Spring EQ might be an ideal lender for you. It offers financing options up to $500,000 and fixed rates (APRs) as low as 9.50%, but Spring EQ isn’t available in every state.

It will take about 21 business days for Spring EQ to fund your home equity loan, but you’ll be able to access lengthy repayment terms from five to 30 years. You need a minimum credit score of 640 to qualify for a home equity loan from Spring EQ.  

Home equity line of credit (HELOC)

HELOCs are similar to home equity loans in many ways. They tend to be available to people with more than 15% equity in their homes, offer lower rates but higher fees, and come with the possibility of losing your home if you default. 

However, HELOCs are structured differently. They have a draw period lasting about 10 years, during which time you can spend and pay off your balance, similar to a credit card. After that, they enter a repayment period, during which you’ll pay any remaining balance as if it were a loan. 

Like other lines of credit, most HELOCs feature variable rates that can change over time. This can work for or against you. In a low-interest-rate environment, you may be able to get extra-low rates, but payments can become unaffordable if rates rise.

Because you can use the funds as needed, HELOCs can be an excellent choice for DIYers who plan to buy shed materials over time. This way, you can avoid paying interest on items you don’t need to buy yet.

A good option for…	Not a good option for…
✅ Homeowners with at least 20% equity in their homes	❌ Borrowers who may not be able to make their payments if interest rates rise
✅ Borrowers looking for lower rates than credit cards	❌ Homeowners who are cautious about the possibility of foreclosure if they default on the HELOC
✅ DIYers building their sheds who need to space out costs over time	❌ Homeowners who want to build a lower-cost shed and aren’t planning other home improvement projects

Check out the top HELOC lenders we recommend below:

• Figure – Best overall HELOC
• Hitch – Best HELOC for fast funding

Best overall – Figure

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LendEDU rating: 4.9 out of 5

• Funding in as few as 5 days 
• All-online application and appraisal
• Must draw your full credit line up front, with the option to pay down the balance to restore your credit limit

Figure is a top-rated HELOC lender that offers low fixed rates and fast funding. Figure partners with various credit unions to fund its HELOCs, which may contribute to the lower rates.

The downside is that Figure is a relatively new lender with a unique funding model based on blockchain technology. It hasn’t withstood the test of time yet, but it could be an excellent way to qualify for a low-rate HELOC, especially if you need funds fast. 

Figure’s HELOC amounts range from $15,000 to $400,000. Figure’s rates (APRs) range from 8.45% to 17.10%, and these rates include an origination fee of up to 4.99%. You’ll need a fair credit score of 620 or higher to qualify. If you do, you can open a HELOC with repayment terms from five to 30 years. Because Figure requires an initial draw of 100% of your credit line, we think this lender is best for borrowers planning a high-priced shed project (at least $15,000) or other home renovations.

Best for fast funding – Hitch

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LendEDU rating: 4.4 out of 5

• Quick funding once approved
• Requires initial draw of 100% of credit line (minus fees)
• Available in Colorado, Florida, Oregon, Utah, and the District of Columbia*

*As of March 2024

Hitch is an online HELOC lender network that matches you up with another lender to provide funds for your shed project, so you may be more likely to find the lowest rates versus working with a single lender.

Hitch is a terrific choice if you need funds faster than the average HELOC lender. Unlike a traditional HELOC, which can take up to six weeks to fund, Hitch uses an automated approach so that it can get your funds to you within 21 days.

You can open a HELOC from $25,000 to $500,000. Expect rates (APRs) of 7.75% to 13.00%, and closing costs from 3% to 5%. Your draw period on a Hitch HELOC will be 10 years. Similar to Figure, Hitch requires an initial draw of 100% of the credit line. With its higher minimum amount, we think it’s best for those planning a more extensive home renovation, not just building a single shed.

Manufacturer loan or line of credit

Many manufacturers and home improvement stores offer lines of credit and loans for storage shed financing. These options often feature promotional zero-interest offers and may be available to borrowers with bad credit. 

Be vigilant with these offers. Read all the fine print to ensure no “gotchas” are hidden in the details. 

For instance, some loans may come with deferred financing, where you won’t owe interest if you repay everything before the financing period ends. If you don’t, you’re back-charged all the interest you thought you were saving, often at a higher rate than the average credit card offer.

What to look for in manufacturer financing

If you opt for manufacturer financing, here’s what to keep in mind:

• Look for loans with the lowest rates and fees.
• Read the contract thoroughly, and don’t sign anything until you understand how it works.
• Don’t be afraid to shop around with other lenders, which may have better financing offers.
• Long-term loans can lower your monthly payment but cost more in interest overall.

Best for…	Not a good option for…
✅ Borrowers with bad credit	❌ Borrowers who don’t read through all the terms and conditions
✅ Borrowers disciplined enough to pay off the financed amount within a specific time frame	❌ Borrowers who can’t repay the line of credit before any promotional offers expire

Rent-to-own manufacturer financing

Some shed sellers offer rent-to-own financing, where you rent the shed with weekly or monthly payments. Eventually, you pay off the shed, and the company transfers full ownership to you. 

This option is similar to paying off a loan, but it’s marketed toward those with bad credit who may not qualify for shed loans. 

At first glance, it sounds terrific, but there’s a catch: You’ll pay much more over time. Rent-to-own financing can increase the cost of your purchase by three or four times, making a shed far more expensive. 

Because you don’t own the shed until the end of the contract, you’ll lose all that value if the lender repossesses it or you need to get rid of it. You won’t be able to sell it, pay off the remainder of your loan, or keep the leftover funds if you sell it.

Best for…	Not a good option for…
✅ Borrowers with bad credit	❌ Borrowers who can qualify for a more affordable financing option
✅ Borrowers who can keep up with weekly or monthly payments	❌ Borrowers who may want to sell the shed in the near future

How do I know which financing option is best?

It can be tough to choose the right storage shed financing option. If you’re unsure of what to choose, here’s a simple three-step process to guide you:

1. Do you prefer a loan or line of credit? A loan offers a lump sum upfront and may come with fixed interest rates and regular payments, which could be easier to budget for. A line of credit, on the other hand, offers more flexibility, so you can borrow only what you need and pay it back as you go. If you anticipate variable expenses, a line of credit might be better. But if you only need a certain amount to put toward a shed, you might prefer the predictability of an installment loan. 
2. What type of credit do you have? Check your credit score, which can guide you toward specific financing options and even certain lenders. 
3. Do you have any home equity? If you have 20% or more equity in your home, consider whether you’re comfortable tapping into it for financing a shed. If not, consider personal loans or manufacturer lines of credit and loans. 

How much does a shed cost?

Sheds come in all shapes and sizes, from simple lean-to closets to store yard tools to small outbuildings that house livestock or even people. So there’s no one-size-fits-all range of costs. They vary more than most home improvement projects. 

But we can provide costs to consider when choosing how much shed financing you’ll need:

Type of shed	Typical cost range
Prefabricated	$350 – $4,000
Custom-built by installers	$800 – $5,000
Custom-built, DIY	$2,000

In addition to the type of shed you choose to build, you’ll have a wide range of design choices that will affect your total costs. 

Material costs, for example, vary—from plastic sheds that cost less than $1,000 to metal sheds costing as high as $7,000. Brick sheds can cost upward of $24,000. Meanwhile, a shed’s foundation can range from $50 to $200 for a skid foundation to more than $12,000 for a concrete slab.

If you build your shed, you can save money for most features. If you hire a professional installer, you can expect to pay more toward the higher end. 

FAQ

Does an online lender or bank offer better financing than a manufacturer?

Sometimes. Manufacturers and home improvement stores often offer promotional financing to get you to make a purchase, which can be a way to save money. But watch out for hidden terms in the contract, which can negate any savings. 

Does the type of shed affect my financing options?

Yes. Some lenders have a minimum financing amount, and if you’re not buying an expensive enough shed, you may be unable to take out that loan. 

If you’re building your own shed, you may miss out on promotional financing offers from manufacturers.

Is it worth financing a shed?

It depends. If you can’t pay in cash, financing a shed can be a solid option if it adds value to your life and if making payments won’t set you back elsewhere in your budget. 

If you can afford the payments only by forgoing saving for an emergency fund or by withdrawing from your emergency fund to make the payments, it may not be worth it.

Recap: Shed financing options

Lender	Product	Rates (APR)
SoFi	Personal loan	8.99% – 29.49%
Upgrade	Personal loan	8.49% – 35.99%
Credible	Personal loan marketplace	7.49% – 35.99%
Spring EQ	Home equity loan	Starting at 9.50%
Figure	Home equity line of credit	8.45% – 17.10%
Hitch	Home equity line of credit	7.75% – 13.00%