There are many ways to finance a garage door purchase whether it’s a new or replacement door.
These include popular options like home equity loans, personal loans and putting the purchase on a credit card. There are finance charges for each of those, and some types are secured (home equity loan) and others are unsecured (home improvement loan).
There are also garage door financing options for low-income homeowners.
Here are ways to finance a new or replacement garage door. Each one is explained including pros and cons for each, payback timeline and criteria for obtaining the loan.
Unsecured Loans
The advantage of an unsecured loan is that you do not have to risk your home as collateral – meaning the loan isn’t taken against your home’s equity.
The downside for some of these is higher interest rates than available from a conventional refinanced home mortgage or home equity line of credit (HELOC).
Home Improvement Loans
These are also called personal loans and signature loans.
Most lending institutions like banks and credit unions plus online lenders offer home improvement loans to established customers – and sometimes to new customers.
Apply for a loan and request a dollar amount.
The amount offered might have to be adjusted if you don’t qualify for the full amount you requested.
*About 10% of homeowners use a personal loan to finance a new garage door.
- Criteria: The application will be considered based on your credit score and income.
- Repayment Period: Up to 10 or 12 years maximum depending on the lender.
- Pros: No collateral is required. Quick turnaround times – loans are often approved within days. These loans usually cap at $100,000, but that is far more than you need for even the cost of a wood garage door with a new garage door opener.
- Cons: Interest rates are higher than for secured loans. The lender is taking more risk, so you pay more interest. Your rate might be exorbitant if you have a poor credit score / FICO score. You’ll have application fees and late fees if you miss a payment.
Credit Card
Using a card might make sense if you can pay off the balance quickly or you find a great introductory APR offer.
If you are applying for a new account, some give 0% introductory annual percentage rate (APR) for up to 12 months. If you pay off the purchase before the end of the introductory APR, you pay no interest.
*Around 37% of new garage door purchases are made on a credit card.
- Criteria: Having enough available credit on the account. You’ll need around $1,500 to cover the cost of a steel garage door installed on a single-car garage. Most 2-car garage doors cost $2,500 to $10,000 depending on garage door styles, material options and size of the door.
- Repayment Period: Unless you have an extended 0% APR, you’ll need to pay off the purchase in the next billing cycle to avoid paying finance charges.
- Pros: No loan of any kind is needed. Some great introductory APRs are available. Many cards have a cash back program, and you could receive up to 5% of the replacement or new garage door cost back in cash. That’s $200 on a $4,000 garage door.
- Cons: If you don’t pay off the loan the next billing cycle or before a 0% APR ends, you’ll incur finance charges. They can be steep and add up quickly. The rate on current cards is usually between 9.99% and 29.99%. On the high end, that’s a rate of $1,200 per year on a $4,000 garage door. Late fees for missed payments are $29 to $50.
Personal Loan from an Individual
Also called a private loan, this is a loan made between two individuals. Terms of the loan including interest rate and length of the loan are negotiated between the lender and the borrower.
- Criteria: Someone is willing to lend you the money and agrees to terms that are suitable for your situation.
- Repayment Period: Negotiable, but usually 5 years maximum on a personal loan for a garage door. One to 3 years is more common.
- Pros: Flexibility in loan amount, terms, etc., as long as you can find a lender. The loan is unsecured.
- Cons: If the lender is a relative or friend, the relationship can be harmed if you are unable to make a payment or otherwise default on the loan.
Government Loans for Home Improvement
US government home improvement loans are available in several loan types that might meet your needs.
HUD Title 1 Property Improvement Loan
A Hud Title 1 loan is an income-based loan. Amounts and repayment terms are based on your property type and its value. To qualify, the debt you incur with the loan must be 45% or less of your income. For example, if you need a $2,500 garage door, your income would need to be around $5,550.
203(K) Rehabilitation Mortgage Insurance Program
The 203K Home Rehabilitation loan program allows homeowners to borrow up to $35,000 extra on their mortgage specifically for repairs, improvements and upgrades.
Veterans Affairs or VA Cash-out Refinance loans
VA home refinance loans allow veterans to receive cash based on their equity. It is a home equity loan backed by the insurance of a VA loan guarantee.
- Criteria: Varies by loan from low-income options to those for typical homeowners and veterans of the US military.
- Repayment Period: Varies based on loan type and amount. Some consider your ability to pay as a factor in monthly payments, which affects the payback period.
- Pros: Most are unsecured, and some, like VA loans, are guaranteed by the government.
- Cons: Many homeowners won’t meet the criteria to apply for a loan.
Secured Loans
Secured loans mean that you put your home up as collateral, risking having a lender foreclose on it or place a lien on it if you fail to pay.
HELOC – Home Equity Line of Credit
Do you have other home improvements planned? This line of credit allows you to take out what you need for each project, up to your borrowing limit and then pay some or all of it back prior to financing the next project.
- Criteria: Your ability to secure a HELOC, and your HELOC credit limit, are based on your equity in the home, income and credit score. The amount you are eligible to borrow is based on your home’s value. This is called the loan-to-value ratio or LTV.
- Repayment Period: Payments begin immediately, and there are finance charges on the balance. The charges are more than you’d pay on a mortgage but less than the rate on most credit cards.
- Pros: Flexibility. These loans can be easy to obtain if you meet the criteria. And interest rates are reasonable. Plus, they allow you to take additional money out when needed for additional home improvement.
- Cons: Interest rates are variable, so the amount of interest paid in each payment can change based on market factors.
Home Equity Loan
A home equity loan is a second mortgage.
It’s a good choice when:
1 – The interest rate on your first mortgage is lower than current rates, so you don’t want to refinance your mortgage.
2 – You need a larger amount of cash in one chunk, for example, if your home is getting a complete exterior update.
What’s the difference between a HELOC and Home Equity Loan?
A home equity loan is a lump sum payout. You can’t take out money as you need it, as in a HELOC.
*Home equity loans are used in about 9% of new and replacement garage door projects.
- Criteria: Your income, credit score and the LTV – the value of your equity in the home compared to the loan amount you are applying for.
- Repayment Period: Typical periods are 5, 10 and 15 years on a second mortgage, aka a home equity loan.
- Pros: Rates are fixed, so your monthly payments remain the same. The interest on the loan is tax-deductible.
- Cons: The credit score requirement is higher than for other loan types.
There’s a risk that your property value will decline in this volatile and somewhat inflated housing market. If that happens, the amount you owe on the two mortgages could exceed your home’s market value. This means being upside down on your mortgages.
Loan Refinance with Cash Out
A good overview of “Cash-Out” loans is provided by Investopaedia and shown in their comparison image below. If interest rates are lower than the rate on your mortgage, consider refinancing your mortgage and getting cash out for your home improvement projects like a new garage door.
But home mortgage rates have recently been at record lows and are now rising again. And many homeowners refinanced at a low rate.
So currently, fewer homeowners are refinancing, choosing other loan options for paying for a new garage door.
- Criteria: Your LTV on the home, income, credit score and a home appraisal to determine its market value.
- Repayment Period: Varies up to 30 years.
- Pros: If interest rates have dropped, you get that lower rate on all the money you owe, not just what you need for your garage door. And, if the rates go down enough, your new monthly payment could be lower.
- Cons: You’ll have fees for an appraisal, loan application and more. According to research done by CoreLogic’s ClosingCorp, average refinancing closing costs in 2021 were almost $2,400.
Loan Alternatives for Buying a New Garage Door
There are a few other ways you might be able to pay for a new garage door.
Insurance
If your garage door was damaged in a storm or someone ran into it (even if you did), you might be able to make an insurance claim to have it replaced. Talk with your insurance agent or provider if your need for new garage door financing is the result of the door being damaged.
Use Savings
If you have enough money in savings to pay for the new garage door, there are benefits.
- Criteria: Some homeowners consider this when they have an emergency fund in place and enough cash to cover 3-6 months of expenses.
- Repayment Period: Flexible. Being your own “bank” has advantages.
- Pros: No application fees, appraisal fees or interest. You can purchase a new garage door immediately.
- Cons: If using the cash drains your reserves, then you might end up putting emergency purchases on a credit card and paying higher interest rates in the long-term.
Will You Get Your Money Out If You Sell?
Yes. A new garage door is a home improvement project with one of the best returns on investment. According to the 2023 Cost to Value Report, garage door replacement averages $4,300. The resale value is worth $4,418. The cost recouped is about 103%.
