Soon, You Could Take A Loan For Your Security Deposit
Kedar and Sangeeta Kapare, a newly-married couple working with multinational companies, were looking for a house on rent in Delhi's plush south Delhi localities. While they found a rental property that match all their requirements, the security deposit clause weighed them down. The landlord asked for Rs 1,50,000 as deposit alone. The couple thought it was too much to part with so much money in a go and decided against taking this particular house. Instead, they settled for a cheaper house nearby. Kedar still wonders why he couldn't leverage his credit card for this purpose. In most cases, landlords even ask for deposits in cash in a bid to avoid taxes.
In many countries, many corporates are rolling out incentives that would help employees settle nearby their job locations even though it calls for a high security deposit.
Now, companies are coming up that would ease the pains of urban living. Paymatrix is one such provision that allows tenants to access credit and send across rental deposits to their landlords. The landlords, on the other hand, cannot just receive the payments but also manage it, set alarms and reminder and screen a prospective tenant as well. LoanTap is another option that offers loan for security deposit payment to the landlord for 11, 22 and 33 months tenure.
Depending on the city you live in, the number of years you have spent working, other debts that you have to pay off, etc. LoanTap checks what amount can be given you as loan and fixes a repayment tenure for you and also tells you the rate of interest payable per month which could be as low as 1.5 per cent.
How does this help?
You are able to plan better. With credit services such as these, it becomes easier for a prospective tenant to choose convenience over the money involved. Most young professionals are better at managing repayment but could be poor savers. Such services then come across as a saving grace, especially in areas where affordability has touched a crisis point and most markets are priced out.
From around the world
*Penguin Random House UK has launched a scheme, called Home Sweet Loan, to support its employees with the cost of a deposit of a rental property. The scheme is aimed at attracting and retaining talented individuals from diverse backgrounds, and allows employees to borrow up to £2,500 interest-free. This money helps employees pay their rental deposit when moving into a privately rented home.
*Accounting and advisory giant Ernst & Young is providing interest-free loans on flexible terms to graduate trainees in order to ensure that they are able to secure lodging and take up placements in Dublin.
*Korea's Kakao Bank is planning to roll out rental deposit loans too because most of the bank's clientele consists of young adults who have to pay security deposits. Jeonse is a lease system in the country where the tenant pays 60-70 per cent of the total cost of the property for a certain period and not the rent.
*The Neighborhood Economic Development Corporation in the United States is a source of rental deposit loans for renters.