You’ve been looking for months around various neighborhoods by driving around them and have endlessly been checking in with realtors and online apartment rental websites for the perfect apartment. Realtor.com, Trulia, apartments.com, and Zillow – they have all filled up your web browsing history.
Finally, an apartment rental comes up that you fall in love with. However, it may have not come up at the perfect time – perhaps you just had to pay off a large medical bill, paid down your student loan debt, or paid for your wedding. But, it’s time for you to leave your current residency.
You meet with the realtor, apartment manager, or apartment owner and quickly learn just how much of a rental deposit you will be required to pay upfront. As soon as you hear what it costs, you start to panic inside and nervously tell the realtor, apartment manager, or apartment owner that you will have to get back to them. While the monthly rent payment is in your budget, you just were not able to set aside enough money to put down upfront.
Immediately you begin thinking how on earth you will possibly be able to come up with the rental deposit and how you may lose the apartment if you can’t come with it quickly. You need money for that deposit and you need it fast.
Or perhaps you are already comfortable at your current residence but have just started a business and are in need of an office space or storefront – a security deposit loan is not just for consumers. Small business owners and new entrepreneurs find rental deposit loans helpful before their business starts to make any profits. Once their storefront or office is opened and their business is generating income, making their monthly loan payments starts to get easier and easier. Read on to learn more about loans for rent deposit including what the difference is between a secured and unsecured loan.
Loan for Rent Deposit
When an apartment renter needs help putting a down payment on an apartment, a personal loan for rent deposit could come in handy. There are personal loans specifically for this need and they are sometimes referred to as a security deposit loans, rental deposit loan, rental deposit loans, or loans for rent deposit.
Personal loans specifically for borrowing money are available for renters who have some type of established credit history whether they have a good credit score or a bad credit score. As with all loans, a rent deposit loan is subject to loan approval and interest rates vary from borrower to borrower.
Why get a loan for an apartment deposit instead of any personal loan?
Oftentimes a loan for an apartment deposit is unsecured so collateral such as a house or a car is not required. With personal loans in general, secured and unsecured loans are available.
Borrowers pay back their rent deposit loan just like they would pay their rent every month – through making monthly payments. Before applying for this type of loan, checking your credit score is recommended. When lenders see that borrowers have a high credit score, they see that they have a high likelihood of paying back their loans and are more than likely willing to give them a better rate over borrowers who have a bad credit score. Renters are required to pay a lump sum upfront to secure their apartment – this lump sum is known as a rental deposit or a security deposit.
Secured vs. Unsecured Loans for Rent Deposit
The main difference between a secured and unsecured loan for rent deposit is within the interest rate. Most commonly, unsecured loans come with a higher interest rate because they are riskier for lenders who may be concerned with never being repaid.
With secured loans, lenders typically feel more comfortable lending borrowers money because if for any reason they don’t pay the loan back, they will keep the collateral. The types of collateral that most lenders are happy to accept include:
- Secured car loans
- Stock investments
- Savings secured loans
Others may consider:
- Valuable such as jewelry or fine artwork
- A vehicle
Where to Get a Loan for Rent Deposit
Before even applying for a security deposit or rent deposit loan of some sort, it’s best to shop around rates and re-payment terms. There are hundreds, if not thousands of online lenders, banks, and credit unions that lend out these types of loans. Narrow down your search to three lenders and compare what’s best for you, if you have the time to do so. In such a competitive housing market, you may not have time to shop around. Be sure to inquire about approval times and how quickly after approval your money will be accessible.
*federalreserve.gov data for Q3 2019