When you’re running out of space and in the market for a shed there may be the question of how you’re going to pay for a building?Should you use family savings, Put it on a credit card, or use a Rent-to-Own program? Or possibly explore another finance or loan option such as a home equity line of credit, personal or business loan? All of these programs have their pros and cons. Let’s briefly go over an overview of the options you have as a consumer when your in the market and sheds are for sale!
Family Savings | Cash On Hand.
Pros: If you have savings, cash on hand, it’s usually always the best option to purchase a building! Pay cash and be done with it. No interest, No rent to own fees, write a check or pull out those fat wads of $100 bills and the building is yours! When you cash out your building your free and clear, No chance of repossessions of your building, no risk of property liens. You own your building! Congratulations! Not only that but many shed companies will give you small pay in cash discount. Because (here is a secret) they don’t have to pay credit card processing fees when you pay with cash. Unlike debit cards or credit where the business pays to accept cards. So they are usually happy to pass the savings on to you the consumer.
Cons: Some people don’t want to deplete their family savings or cash on hand, they would rather have a lump sum of money in their account and stretch out a shed purchase using a finance tool. Even if it means paying some interest. It’s really personal preference based on your budget and situation.
Not everyone has 2-10k of spare cash laying around when they need storage and need it now! We totally understand that. Here are some more purchase options below.
Rent To Own | The Pros and Cons
Almost anyone can qualify for a rent-to-own program! No credit check! First months payment gets a shed in your yard! Rent to own is not a loan. If you have poor credit or no credit you can still usually get a shed delivered to your yard. Continue to make your monthly payments for 24-36-48 terms and the building is yours at the end of the consecutive payments. When the rental agreement is complete, the building becomes your property.
It’s a better deal than say a mini storage unit where you will never own anything ever, Not only will you not own, but you have to travel to the mini storage facility. With a rent to own program if your faithful you have a chance of owning at the end of the rental period. If you don’t need your building at any point in time during the rental period, a simple phone call to the rental company letting them know you no longer need the building frees you of the rent to own obligation.
The rental agreement can be canceled at any time and for any reason. “I just don’t need the storage space anymore, please come pick up the building” is a common reason people cancel rent to own agreements. others have more pressing reasons why they cancel rent to own agreements. Things such as losing a job, taking care of elderly parents, job-related relocations or other factors. It’s nice in the event you need to move away to be able to make a phone call to the rental company and be free and clear of your storage shed rent to own obligations. Get your stuff out, and the building usually gets picked up within the month and the contract is terminated. it does not affect your credit.
Rent-to-Own is a service and with all services, there is a cost. Rent to own companies incorporate rental fees into monthly payments. You will end up paying more for your building than a cash purchase, how much varies based on the rental company, rental contract and the time you take to pay off your building if you go full term of the contract or cash off the building early.
The amount you will pay above the cash price of your building varies but will certainly be significantly above the cash price of the building if you rent for the full term of the contract. That puts some motivation under you to pay off early if possible. Most rent to own companies have a pay off early option and if you pay your building off within the first 6 months to a year you will save a bunch as compared to stretching out the rental contract to the maximum time on the rental contract.
Failure to pay for 1 or 2 consecutive months on most Rent-To-Own programs generally cancels the rent to own agreement. If you fail to make 1-2 monthly payments the building will usually be picked up by a trucker who repossess it on behalf of the rental company. So be prepared to get your stuff out and let the building get hauled off if you can not, or decide not to continue paying the monthly payments. Even if you go into default and the building gets repossessed by the rental company, you are free and clear of the rent to own obligation and it does not affect your credit.
Putting a shed purchase on a credit card | Pros and Cons
For those with good to excellent credit putting a shed building purchase on a credit card can be a good short term option. A shed is a meaningful purchase and some people justify using a credit card and would rather put it on their card then use a rent to own program or deplete their immediate cash on hand. Some people plan to pay it off within 1-3 months. Others take advantage of balance transfers where they can stretch off paying for their building in full with while paying 0-5% for balance transfers. Points and cash back on cards can be nice and an incentive for people to use their cards. It’s really up to the individual circumstance.
Overextending your usage of your available credit could knock your credit score down a bit. You may plan to pay it off and then not be able to in the time frame you were hoping to. 10-24% APR interest could start to be charged to your account if you float a balance, and your monthly credit card payments could climb and stay much higher then you would like. A large shed purchase on a credit card combined with another consumer spending could push your credit card balance up to a place where it’s very difficult to pay it down. Spend wisely and don’t rush into any purchase based on emotions if you can’t afford it, your financial peace of mind is worth putting off a shed purchase for a few months.
Other Financing Options
Home Equity Line of Credit
Many people choose to utilize there home equity lines of credit, depending on their situation this can be a great way to take advantage of fairly low interest rates and get that home improvement project underway. Do your research and talk to your bank to see what options you may have as a homeowner!
Depending on your credit score you may qualify for a personal loan. Interest rates may be higher than a home equity line of credit but substantially lower than some credit cards. With special offers from a lender, an unsecured personal loan could be something to utilize. Do your research and decide how to move forward!
If you’re using your building for business purposes, such as a small family based business, garage warehouse, or studio shed you may qualify for a business loan. Check with your credit union, bank, or another lender to see what options they have available.
Thanks for reading! People just like you are in many different financial and life situations, we hope some of the general pointers here will help you decide how to move forward on your next building project! if Sheds by Design can be of any assistance in helping you get the storage building you need, contact us and we will be in touch shortly.