If you’re planning to adopt and are wondering about finance, read this guide to find out what your options are.
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Personal loans to consider for covering adoption costs
How does a baby and adoption loan actually work?
Most baby and adoption loans are generally unsecured, meaning you don’t have to provide any kind of collateral (such as a house or car that you own). Depending on your circumstances, you can borrow up to $25,000 through an unsecured personal adoption loan. The maximum you qualify for depends on factors such as the lender you choose, your creditworthiness and the adoption details.
What types of financing are available?
There are several different baby and adoption loans available depending on your circumstance. These include:
- Unsecured personal loans. Banks and credit unions across the US provide unsecured personal loans that you can use for adoption costs. To qualify, you usually need a good or excellent credit rating.
- Peer-to-peer loans. Online peer-to-peer lending platforms connect borrowers with investors who can fund your loan. Your credit rating plays an important role in finding an investor. It also helps determine the interest rate you get.
- Bad credit personal loans. If you suffer from poor or bad creditworthiness, you can look for loan providers that offer personal loans to individuals with less-than-perfect credit. The interest you’ll have to pay will be higher when compared to conventional personal loans.
- Adoption grants. Some organizations offer grants to people who wish to adopt children. The National Adoption Foundation is one example. Others include A Child Waits Foundation, Help Us Adopt, Gift of Adoption Fund and CMomA.
- Federal adoption tax benefits. You can offset some of the costs involved in adoption through the Federal Adoption Tax Credit, which the US Government made permanent in July 2013. This tax credit can be beneficial if you have tax liabilities. The maximum amount available has changed every year, starting with $12,970 in 2013, to $13,190 in 2014, $13,400 in 2015 and $13,460 in 2016.
- Employer adoption reimbursements. A significant number of government agencies and businesses offer adoption benefits to their employees. These can come in the form of adoption information, referral services, post-adoption counseling and paid or unpaid leave. Some employers also provide financial reimbursement for agency fees, as well as medical and legal expenses.
- Government subsidies. You may be able to take advantage of federal and state adoption assistance if you are adopting a hard-to-place child. These subsidies are designed to help you meet the child’s ongoing requirements, and are available for children that are in the care of public or private agencies.
Top three personal loan picks for financing an adoption
|Provider||Why we like it||Loan amounts||Min. APR||Min. credit score|
|SoFi||SoFi has a straightforward online application with an unusual amount of perks like unemployment protection and community events.||$5,000–$100,000||5.49%||Good credit||Read our review|
|Even Financial||This free service can save you serious time by connecting you with lenders offering the kind of loan you’re looking for.||$1,000–$100,000||4.99%||580||Read our review|
|Laurel Road||Quick funding with no origination or prepayment fees and a 0.25% discount on interest for signing up for autopay.||$1,000–$45,000||5.5%||680||Read our review|
How can I compare baby and adoption loans?
Considering the following factors before choosing a baby and adoption loan can help you find the right option for you:
- Interest. The interest your loan attracts can have a significant impact on how much you end up paying for the money you borrow. Some organizations, such as Lifesong for Orphans, provide interest-free adoption loans, but you may have to meet certain eligibility criteria to qualify.
- Fees. Fees your lender may charge include application fees, disbursement fees, prepayment fees and late payment fees.
- Eligibility criteria. In most circumstances, you should have good creditworthiness to qualify. Some grant providers might require personal references from your pastor, employer, co-workers or friends.
- Turnaround time. The loan processing time can vary depending on which option you choose. If you apply for a personal loan or a peer-to-peer loan, you can receive the approved funds within days. When it comes to grants and subsidies, the process takes longer.
- Loan term. Your loan term determines the value of your repayments. Make sure you consider your current financial circumstances and the size of the repayments before requesting a specific loan term. If possible, choose a shorter loan term so that you can reduce the amount of interest you pay over the life of the loan.
How much does adoption cost?
The costs of adopting a child vary significantly depending on the kind of adoption you’re pursuing. If you’re adopting a child through a county foster or adopt program, the process usually costs between $0 and $1,000. If you’re adopting a newborn voluntarily using the services of a non-profit organization, on the other hand, you may end up spending $10,000 to $25,000. Adopting a newborn through an attorney can cost $20,000 to $30,000.
If you wish to take the private domestic infant adoption route, you can use the services of an adoption lawyer or agency. The costs would vary depending on factors such as expenses borne by the birth mother, attorney or agency fees, background checks, failed adoption matches, out-of-state agency fees and travel.
Adoption agency fees can range from $5,000 to over $40,000. However, more than half fall within the $10,000 to $30,000 bracket. Some adoption agencies make use of sliding fee scales, where they charge fees based on your income.
Things to avoid when financing an adoption
- If you think you might have trouble repaying the borrowed money in a timely manner, avoid taking a loan in the first place. Not making repayments on time would have an adverse effect on your creditworthiness and could impact your ability to borrow money in the future.
- Be wary of taking a loan with a very high annual percentage rate (APR) that would increase the overall cost of the loan. Instead, check if you qualify for any grants or subsidies.
- Look out for companies that try to guilt you into spending more than you can afford.