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Is a Loan For Rental Deposit a Good Idea?

With soaring property rates, renting has become the preferred choice. A recent RICS – Knight Frank report revealed that almost 30% of Indians stay on rent in Tier-1 and Tier-2 cities. However, with rental inflation in 2019 pegged at 3-13% in key cities, according to NoBroker, relocating to a prominent locality can strain your finances. The security deposit itself can range between 2-12 months of rent. In places like Mumbai and Bangalore, this often translates to a rental deposit of over Rs.1 lakh. To address this initial cost, you can avail a loan for a rental deposit.

Read Also : 5 Ways in Which a Rental Deposit Loan Helps You

However, is it a good idea to do so? For more insights, read on.

What is a Loan for Rental Deposit?

A rental deposit loan is an unsecured financing solution that makes relocation easy. It helps you pay the security deposit and tackle other rental-related expenses that come your way.

Rental deposit loans exist in the market primarily because of high rental rates in prime localities and the fact that landlords ask for high amounts as the security deposit.

To illustrate, consider the average rental deposit you’d pay based on rental rates for apartments in the city centre as per Numbeo.
• For a 1 BHK in Bengaluru, the rental is about Rs.17,295 and considering 8 months’ rent, the deposit would be Rs.1.38 lakh
• For a 1BHK is Mumbai, the rental is about Rs. 44,629 and considering 4 months’ rent, the deposit would be Rs.1.78 lakh

You can avail a Rental Deposit Loan from a lender such as Bajaj Finserv and get a total loan amount of up to Rs.5 lakh, which you can easily repay over a flexible tenor of up to 36 months. Bajaj Finserv also offers the Flexi Hybrid facility, using which you can borrow from the approved sanction in parts, multiple times, and pay interest only on the amount withdrawn. You can also make free part-payments through the tenor.

Must Read : 5 Things You Should Check Before Renting A New House

What Are The Benefits of a Loan For Rental Deposit? 

The most important benefit of a loan for rental deposit is that it helps you secure the flat of your choice by enabling you to pay the security deposit demanded. It does this by offering ample and speedy finance. For instance, Bajaj Finserv offers funding via a 5-minute approval and 24-hour disbursal procedure.

Secondly, as a result of getting the flat you desire, you benefit from a favorable location, spending less time and expense in commuting. This is of vital importance in metros as data from Uber indicates that every year Mumbaikars waste about 11 days in traffic queues. To add to this, consider the fact that Mumbai is not even the most congested city in India – Bangalore is!

Additional Read : 4 Things Every House-Owner Should Do Before Renting Out Their Property

Thirdly, it helps you manage your post-relocation budget. As illustrated above, you may have to pay over a lakh towards your security deposit. What happens in case of a rental deposit loan is that while you get finance for this amount, you generally pay only interest through the tenor. While this does imply larger net interest payments as your principal isn’t reducing, you do get the time to settle in and adjust to a new locality as your debt outgo per month does not include the principal component.

Fourthly, when you apply for Rental Deposit Loan from lenders like Bajaj Finserv you get finance not only for the security deposit, but also for brokerage fees, transport costs, 1 months’ advance rent payment, and other ancillary expenses, such as hiring a plumber or buying a microwave oven.

Lastly, Bajaj Finserv also offers you value-added services such as doorstep assistance in drafting and registering your rental agreement and access to the add-on My Home insurance cover by Bajaj Allianz. To get instant approval on a loan for a rental deposit, check your pre-approved offer from Bajaj Finserv and access a customized deal today!

The content of this document is meant merely for information purposes. The personal loan features mentioned in this article are subject to updation, completion, revision, verification and the same may change materially based on policy revisions. For more details, please visit our Personal Loan terms and conditions page here.

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