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How to Pay for Large Expenses

Understand your options to pay for large expenses

Paying for an unexpected large expense video

Maybe you have a big move coming up, or your furnace is on the fritz. If you’re wondering where you’ll get the funds you need to cover an unexpected large expense, we have some options.
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Knowing which type of credit to use for each expense in your life is key to reaching your goals. When it comes to large expenses, a loan or line of credit can provide the funds you need. Whether your need is expected or unexpected, choosing the best option for your situation starts by determining whether it’s a one-time or ongoing expense.

What's better – A loan or a line of credit?

A loan may be a good option when you have a large, one-time expense

An installment loan gives you a lump sum to consolidate debt or make a large one-time purchase. Unlike a line of credit, a loan has:

  • A fixed term, so you know exactly when the loan is scheduled to be paid off
  • A fixed rate and monthly payment that stay the same for the length of the loan –– unless it’s a loan with an adjustable rate like an adjustable-rate mortgage (ARM)

A line of credit may be the answer for funding large, ongoing expenses

Some large expenses are ongoing – like remodeling your home or covering wedding expenses. A line of credit gives you a reusable source of funds that you can use as needed up to your credit limit. Unlike a loan, a line of credit has:

  • A variable annual percentage rate (APR) that can change as interest rates rise or fall
  • An ongoing, revolving term debt that is repaid periodically and can be borrowed again once it is repaid
  • Variable monthly payments

Compare secured vs. unsecured loans or lines of credit

With secured credit, the borrower pledges an asset –– like a home, car, or savings account ––as collateral for the loan or line. If the borrower defaults, the creditor can take possession of the asset used as collateral to regain the amount they loaned to the borrower. With unsecured credit, there is no collateral required for the amount borrowed or financed.

Secured loans or lines of credit

  • These loans and lines require collateral –– an asset such as a car, home, CD, or savings account.
  • The approval, loan/line amount, rate, and term are determined by the value of the collateral, your available equity, your credit history and credit score – as well as your debt-to-income ratio and other factors determined by the lender. If the loan or line is secured by a CD or savings account, a strong credit history may not be required.
  • Secured loans can offer lower interest rates, higher spending limits, and longer repayment terms. But the assets used to secure the loan are at risk if you don’t repay the loan as agreed.

Unsecured loans and lines of credit

  • These loans and lines don’t require any collateral or security.
  • The approval, loan/line amount, rate, and term are based on the strength of your credit history and credit score — as well as your debt-to-income ratio, and other factors determined by the lender.
  • Unsecured loans/lines usually have higher interest rates, lower spending limits, and shorter repayment terms than secured credit because there’s no collateral required.

Compare your options for funding large expenses

Loans

Wells Fargo offers a variety of fixed-rate loans to fund large, one-time expenses:

Product
Amount
Type
Rate and Term
Fees
Personal Loan
$3,000 - $100,000
Unsecured
A fixed rate and term of 12 to 60 months
None
CD/Savings Secured Loan $3,000 - $250,000
Secured by your CD or savings
A fixed rate and term of 12 to 120 months based on the loan amount
$75 origination fee
Auto Loan
$5,000 - $100,000
Secured by your vehicle
A fixed rate and term of 12 to 72 months
$99 origination fee
Private Student Loans
$1,000 - $250,000
Unsecured
A fixed or variable rate and term of up to 15 years, or 20 years for consolidation
None

Lines of credit

Wells Fargo offers a range of lines of credit to pay for large, ongoing expenses:

Product
Amount
Type
Rate and Term
Fees
Personal Line of Credit
$3,000 - $100,000
Unsecured
A variable rate and a revolving, open-ended term
$25 annual fee
CD/Savings Secured Line of Credit $5,000 - $250,000
Secured by your CD or savings
A variable rate and a revolving, open-ended term
$25 annual fee
Home Equity Line of Credit (HELOC)
$25,000 - $500,000
Secured by your home
A variable rate, with fixed-rate advance options, and open-ended term.

Fee Details

 Check Your Credit Report 

Make sure you check it at least once a year, so you know what’s on it –– especially before you apply for a new credit account. It’s free at annualcreditreport.com.

My Credit Options Guide®

This educational tool, exclusively for Wells Fargo customers, generates a customized guide of product options, interest rates, and fees based on the financial information you provide. It's a powerful way to prepare for your next big financial goal.

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Annual fee is waived the first year and thereafter with a balance of $20,000+ and a qualifying PMA® Package