Planning & Budgeting

Comparing Financing for a Home Remodel with a New Car

Are you still determining if financing a home remodel is right for you? Compare financing a home remodel and a new car to help you know financing options.


According to major lending agencies, the majority of new cars are purchased using financing. More than 85% of new cars purchased are financed.

On the other hand, most home remodels are not financed. Current survey data reports that only around 14% of homeowners use some form of financing to pay for a home remodeling project.

As a homeowner, are you aware of the financing similarities and differences between a home remodel and a new car?

If you are wanting to update your home and don’t know whether financing is available, you may initially think that your dream is unattainable. Knowing you can finance a home project like you might finance a new car will open up a lot of options for you.

As a design and remodeling contractor with over 15 years of experience, we have expertise in helping clients with home remodel financing. As well, we have a long-standing relationship with  Michigan State University Federal Credit Union (MSUFCU) to help clients who want to use financing for their remodeling projects.

While you may be concerned this is a viewpoint in favor of home remodeling, our goal for this article is to provide you with information from both sides to help you make your decision.

In this article, you'll discover how financing a home remodeling project is similar and different to financing a car, and what options are available to you.

5 Similarities of financing a home remodel vs a new car

Like financing a new car, financing a home remodeling project will:

  • Be determined by your credit score. Your credit score is a major determinant of whether you will qualify for financing with either a remodeling project or a new car.
  • Allow you to make monthly payments. The benefit of financing is that you can make smaller payments over a set length of time, whether for a home remodel or a new car.
  • Be affected by your debt-to-income ratio. The amount of money you earn compared to your debts is used to determine financing options for both a home remodel and a new car.
  • Be available through a third-party. Getting pre-approved through your bank or credit union is a financing option available for both a home remodel and a new car.
  • Require a down payment/deposit. Paying for a new car and home remodel will typically require a down payment of some kind. The amount varies depending on the total price and your credit score.

5 Differences in financing a home remodel vs a new car

Unlike financing a car, financing a home remodel may:

  • Have more loan options. There are multiple loan options available to finance a home remodel that aren’t available for new cars. These include construction loans, home equity loans, and securities-backed lines of credit.
  • Use a construction loan to pay. A construction loan is used by people to either build a new structure or remodel an existing one. This is a viable financing option for homeowners who want to use this to finance their home remodel.
  • Use your home equity to pay. Equity is the difference between your home’s value and what you owe. Depending on how much equity you have, you may be able to tap into it to pay for your home remodel. Used car trade-in values never match a new car’s price, so equity loans aren’t feasible for them.
  • Use your securities and investments to pay. Allows you to borrow money using securities held in your investment accounts as collateral. SBLOC’s are similar to a HELOC but instead of using your home’s value as collateral, your investments are.
  • Be eligible for a Title 1 property home improvement loan. The Dept. of HUD offers property improvement loans. These loans come from an FHA-approved lender. Cars have no similar financing option.

Next steps for financing your home remodel or new car

Without knowing the financing options to help you with your home remodeling projects or car purchase, you may not realize you can update your home like you’ve dreamed. 

Comparing financing options for a home remodel vs a new car helps you understand which financing opportunities are available to you and which is best for you and your situation.

Our mission at Custom Built is to not only design and build the dream spaces of Mid-Michigan homeowners, but to also educate you on everything related to home remodeling. 

To learn more about Custom Built’s financing options, reach out to our sales team. They would be happy to answer any questions you may have!

To learn more about home remodel pricing, check out the following topics.

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