Deposit loans are becoming more and more popular as a way of securing a new rental property. Obviously, it is important that you can get a deposit loan quickly as rental properties don't wait around for you.
A rental deposit is a must when renting these days whether it's an apartment rental deposit or a house rental deposit and you will find it very hard to rent a new home without one, so a deposit loan is really helpful if you can’t raise the cash yourself. Though one should be careful when looking at these types of loans they can represent the best way of helping you securing a lease on that new home you have promised yourself.
In this article we will explain some of the things to check for when looking at a loan for the deposit as not all companies will offer what is right for you. Below we will discuss what is important when you are looking for a deposit loan.
How to get a rent deposit loan
You need to calculate how much money you will need to borrow. Ask yourself the question - "How much are typical deposits in my area - 600, 1000, or more?" You need to ensure that you can borrow this amount of money from one Loan Company so make sure they will offer you the full loan amount. It’s not a good idea to borrow the money from more than one company as it will make it harder to manage the repayments of the loan.
How long should I take a deposit loan out for?
This is down to you, your current situation and what you think is going to happen to you over the time you take the loan out for. You might only need a short-term loan to tide you over or a longer term loan until you get back on your feet.
Why a short term deposit loan might be best?
If you need to borrow money for the deposit to move property but you have got a deposit which is going to be returned from the property you are currently renting, a short term loan might be better just to 'bridge the gap'. Don't forget, when you return the keys from your current property it can take 14 days for that deposit to be returned, but of course you need somewhere else to live and a deposit will be required for that property. In this situation a short term loan might be best. Get the money quickly, get it paid back quickly and then forget about it and move on. With a short term deposit loan you will pay back more on a monthly or weekly basis, but you will repay the loan more quickly.
Why might a long term deposit loan might be best?
If things are a bit tight and you want to reduce the amount of loan that you pay back each month then it’s easy to get a long term loan as this will suit you better.
Paying the loan back over a longer period will help you manage your bills better and make the amount you borrow more affordable.
APR or Annual Percentage Rate - what is this and why is it important when looking for a deposit loan?
APR stands for annual percentage rate; it is the percentage rate of interest charged on the money you borrow. It is one of the most important things to consider when searching for a deposit loan.
What you will be looking for is a low APR. The lower the APR the less interest you will be paying on the loan. Conversely, the higher the APR the more you will have to repay. For example, if you borrow 500 at 10% APR you will pay 50 interest over 12 months and repay 550. Sometimes APR is artificially high because short term loans quote APR over 12 months even if you take the loan over 1 month.
What is the best loan company for a deposit loan for me?
The loan market is very competitive and there are many companies out there, so there’s not a simple answer to this question. It is important to find a loan that meets your needs. You don’t want to pay more than you need to and you want it to fit in with how much you can repay easily, so it’s important to shop around.
We recommend trying several loan companies’ rates to see which offers you the best deal.