Ria (31), a media professional in Mumbai, takes nearly three hours every day to commute for work. Professionals like Ria often contemplate renting a house closer to their workplace, so that they can cut down on travel time and have a better quality of life. Ria would like more time on her hands to indulge in fitness activities, access to better entertainment options and explore new places and restaurants. In a city like Mumbai, where property prices are sky high, she says that it is not easy to shift closer to her workplace without shelling out a huge sum for the security deposit, even if the higher rents are manageable. This upfront payment to the landlord can amount to anywhere between 11-22 months’ rent and is a big deterrent for someone who is in the initial stage of their career, as they may not have much savings. In many cases, the monthly rent also comes down, if one pays a higher security deposit.
Sameer (36), an IT professional from Delhi, has accepted an offer from a startup based out of Bengaluru. However, he is concerned about the shifting, as he has a family and school-going children. The monthly rental for a small apartment in Bengaluru, is higher than that for a similar space in Delhi, he says. Also, while Delhi has a norm of 2-6 months’ rent as security deposit, in Bengaluru it goes as high as rent for 11- 22 months. While the employer may take care of the relocation charges, the security deposit is not covered in such allowances. Moreover, paying the security deposit for renting a house of his choice, will have a direct hit on Sameer’s savings or investments.
What is a rental deposit loan?
These are just two examples of salaried professionals, who face the problem of high security deposit for renting an apartment in metropolitan cities. Several new-age digital lending platforms understand that shifting can dent one’s hard-earned savings. For salaried individuals like Ria and Sameer, who find it difficult to block a sum of Rs 2-4 lakhs or more, a loan for the security deposit can come in handy.
A rental deposit loan, will help them to pay the security deposit, without burdening their existing liquid assets. Rental deposit loan amounts range from Rs 1 lakh to Rs 5 lakhs. The loan tenure is from 11 months to 33 months, depending on the tenure of the lease/rental agreement. The borrower has to pay only the interest amount till the termination of the lease. The security deposit amount is returned by the landlord on the completion of lease period or when the customer vacates the house, whichever is earlier. A declaration is taken from the landlord in this regard. Rental deposit loans offer flexibility and better expense management, apart from being extremely convenient.
How to avail of a loan for rental security deposit
To avail of this loan, all one needs to do is to fill an online application and upload the relevant documents. All documents are verified by the company and the loan is generally disbursed within 24 hours, after it is approved. A rental deposit loan is convenient for tenants, as the monthly interest outflow is very low, compared to a regular loan’s EMI. With the advent of online lending platforms, you can cherry-pick a loan offering as per your current requirement, which helps you to maintain financial stability under such circumstances. One does not need to dent one’s current savings or compromise on monthly expenditures or borrow from someone. By being aware, following financial discipline and choosing an apt customised loan option, one can relocate without much financial burden. The stress of moving to a new place can be minimised, with simple financial tools available from new-age online lending firms. This helps one to focus on the other aspects of shifting, rather than worrying about the security deposit monies.
(The writer is co-founder and CTO, LoanTap)