Faced with sometimes costly renovation works, many owners are turning to the credit solution to finance their project. For people whose first loan is “consumer”, the question of the real cost of this solution often comes up. How much does a loan for renovation work really cost? We offer some examples.
First example: funding of 50,000 dollars over 24 months
A couple wants to finance the transformation of their bathroom. The total cost of the works is 50,000 dollars. With sufficient income, the couple plans to repay the loan over 24 months and obtain a loan offer with a rate of 7.9%.
- The monthly payment is 2,252 dollars, interest included.
- The total cost is 4,069 dollars.
- In the end, the couple reimburses 54,069 dollars in 24 months.
Second example: funding of 40,000 dollars over 36 months
A single person wishes to finance renovation works in their apartment. The amount is estimated at 40,000 dollars. For a 36-month loan with a rate of 6.9%:
- The monthly payment is 1’229 dollars, interest included.
- The total cost amounts to 4,259 dollars.
- In the end, the single person reimburses 44,259 dollars in 36 months.
Compared to the first example, the total cost remains similar, debiting a lower amount and a more advantageous interest rate. This is mainly due to a longer repayment period.
Third example: funding of 25,000 dollars over 12 months
A family plans to take out a loan to finance the development of a new bedroom. The total cost of 25,000 dollars includes renovation, decoration and furniture. With a 12-month loan and an interest rate of 8.9%:
- The monthly payment is 2’191 dollars, interest included.
- The total cost is 1,173 dollars.
- In the end, the family reimburses 26,173 dollars in 12 months.
In terms of total cost, this example is the most advantageous. Even if the interest rate is higher (8.9%) than for the other examples, the lower amount combined with a rapid repayment can minimize the cost of credit.
The duration of repayment: an essential element
These examples show it well: the repayment duration, more than the interest rate, is the main element to take into account. Indeed, a long repayment period implies a higher total cost. It is therefore important, when signing a contract, to consider this point. What is your budget? How much can you repay per month? In case of doubt, it is always possible to call on a specialist who will be able to advise you.
Renovation work to finance? call a specialist
Are you planning to finance a project for your house or apartment yourself with a private loan? A specialist like Power Credit can offer you a renovation loan adapted to your needs. Calling in an expert allows you to benefit from neutral advice leading to more advantageous solutions and thus save on the future interests of your loan. In case of doubt, it is also always possible to request a non-binding offer before launching!