Home Depot Project Loan vs. Lowe's Consumer Credit Card

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*This post was last updated November, 2014

Due to popularity, we've created a newly updated post on this topic, here.

Investing money in home renovation is always a smart decision. Either it improves the value of the home for resale or it allows you to feel more comfortable in the space your living in. Most homeowners don't have enough money saved to cover the cost of major home remodeling, so they either take out a loan or avoid the improvements altogether. You shouldn't have to do that.

If you're looking to start new work on your home, you may look into a Home Depot Project Loan or a Lowe's Consumer Credit Card. These options will give you the money you need upfront, and then you can pay it back over time. How do the two compare? Which one is right for you? Let's do some investigating to find out.

Here is our comparison of Home Depot Project Loan vs. Lowe's Consumer Credit Card.

Home Depot Project Loan

Here are some key features of a Home Depot Project Loan:
  • Loans up to $40,000Home Depot Logo
  • 84 months to pay off the loan
  • Interest only payments for the first 6 months
  • No pre-payment penalty
  • 7.99% APR
  • In-store approval
  • Online bill payment

Lowe's Consumer Credit Card

Here are some key features of a Lowe's Consumer Card:
  • Multiple credit lines to choose fromLowes Logo
  • 5% off one Lowe's purchase of $299 or more per day
  • No interest if balance is paid in full in 6 months
  • On-going APR 24.99%
  • No annual fee
  • Online bill pay

Comparing Home Depot and Lowe's Financing Options

14447202_sNow that you have a feel for both the Home Depot Project Loan and the Lowe's Consumer Credit Card, you need to figure out which one – if either – is right for you. Both of them could potentially finance your next home improvement project, but there are individual perks to consider for each. First and foremost, you have to think about which one you could use in your area. If you only have a Lowe's in your city, it would not make any sense to apply for a Home Depot loan and vice versa. If you have both stores in your town, you may be wondering which one offers the best prices, materials, advice, service, and support. This will vary by location.

Looking beyond your opinion, you may find the Home Depot Project Loan to be a little more affordable than the Lowe's Consumer Credit Card. Home Depot carries a 7.99% APR, while Lowe's carries a 24.99% APR. With this in mind, the special Lowe's offers for 6 months special financing for purchases over $299, or 5% off every day purchases, could possibly save you money in the long run.

Lowe's does not explicitly state its maximum line of credit in its consumer credit details, so it is hard to say which option may lead to more money for you. A lot of this will depend on your credit history and income. The only way to know for sure about your available credit is to apply for each and see what results you get.

Neither Lowe's nor Home Depot require annual fees and both of them have special 6 month offers to save money. They can only be used in their designated stores and you have to go to the store to apply. Ultimately, it's up to you to decide which one you want to work with, just make sure you weigh all the considerations before making a decision.

Other Ways to Finance Home Improvement

I don't know about you, but I don't like relying on one store for all my home improvement needs. I may buy my cabinets from one store and my countertops from another. If you don't want to be tied into Lowe's or Home Depot exclusively, there are other ways to finance your construction and renovation projects. Check out some of these creative alternatives:

Second Mortgages

10979357_m_2If you have been in your home for a long time, you may be able to take out a second mortgage loan. This is a loan that occurs on top of your existing mortgage loan. It is usually much smaller than the first loan, extending your overall debt to the value of the home or slightly more. The bank most likely will not loan out more than the total equity in the home. Second mortgages have long loan terms just like first mortgages, and they come with low interest rates. You just have to decide if you have the credit and income to carry something like this.

Home Improvement Loans

Many banks, like Wells Fargo and Chase offer home improvement loans made specifically for these kinds of projects. The loans are often unsecured and used for some type of home renovation. Some banks will require the house to act as collateral on the loan, in which case your home would need to be mortgage free. If you still have a lien on your house, you may want to see what your unsecured options are. Keep in mind that a home improvement loan may have a shorter term than a second mortgage. Make sure you check the payment amounts and payoff dates before making your decision.

Rewards Credit Cards

You could always use a credit card to pay for the9600123_m_2 project, depending on your available credit limit and the amount of money you need. In this case, it may be best to use a rewards card so that you can get something back out of your spending. For instance, Discover It is offering 5% cash back at home improvement stores from now (April) until June 2013. It also has an online retail center where you can save up to 20% on your purchases. Combine that with the 1% cash back offered on all purchases throughout the year, and it's easy to see the advantages of this card over the ones above.

Before getting a Home Depot Project Loan or a Lowe's Consumer Credit Card, make sure you know your options. Weigh out all the costs, rewards and time frames to determine what solution will get you the money you deserve.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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