Home Project Financing Calculator
Should you finance or pay cash for your home improvement project?
Enter Your Project Details
Your Cash Position
Your Results
💡 Recommendation: Finance the Project
Financing saves you $2,914 compared to paying cash (when accounting for opportunity cost).
💳 If You Finance
Initial Payment
$2,000
Monthly Payments
$160 × 60 mo
Total You'll Pay
$11,618
Interest Paid to Lender
-$1,618
Interest Gained on Savings
+$2,014
NET COST TO YOU
$9,604
💵 If You Pay Cash
Initial Payment
$10,000
Monthly Payments
—
Total You'll Pay
$10,000
Interest Paid to Lender
$0
Lost Investment Growth (Opportunity Cost)
+$2,518
NET COST TO YOU
$12,518
Should You Finance or Pay Cash for Home Improvements?
Quick Answer: Financing vs Paying Cash
The best choice depends on your interest rate, cash reserves, and opportunity cost. If you can earn more from your savings than the loan costs in interest, financing makes sense. If you have ample cash reserves (6+ months expenses remaining) and high interest rates (10%+), paying cash is usually better. Always maintain a 3-6 month emergency fund.
When to Finance Your Home Project
- ✓ Interest rate is low (under 6%)
- ✓ Paying cash would deplete emergency savings
- ✓ Your savings earn more than the loan costs
- ✓ You can get 0% promotional financing
- ✓ Project adds significant home value (kitchen, bathrooms)
When to Pay Cash
- ✓ You have ample cash reserves (6+ months expenses remaining)
- ✓ Interest rates are high (10%+)
- ✓ You want to avoid debt
- ✓ Small project cost (under $5,000)
- ✓ Your credit score would result in high rates
Home Improvement Financing Options
Home Equity Loan: 6-9% APR, fixed rate, tax-deductible interest
HELOC: 7-10% APR, variable rate, flexible borrowing
Personal Loan: 7-15% APR, no collateral required, faster approval
Contractor Financing: 0-18% APR, convenient but often expensive
Credit Card (0% promo): 0% for 12-21 months, then 18-25% APR
Don't Forget Opportunity Cost
Opportunity cost is what you give up by choosing one option over another. If you pay $20,000 cash for a kitchen remodel, that $20,000 can't earn interest in your savings account. Over 5 years at 4.5% interest, you'd have missed out on earning $4,900. This is often overlooked when comparing financing vs cash.