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Deposit Loans — No Deposit? No Problem!

There are several reasons why someone would need to take out a deposit loan, and since it is necessary to have a deposit in order to rent a house, the need has become greater than ever. So if you can’t raise the cash yourself, you’ll need to look at your options and decide what is best for your specific needs.

Not all companies offer the same products and you will have to do some homework if you want to get the best rate and an appropriate pay back term. Some of the things you should be looking at;

Do you want a short term or long term loan?
If you only require the amount of the deposit for a short time, for instance if
you will be receiving a deposit returned to you from a previous landlord, then
you can shop for a short term solution.

If however your budget is stretched fairly tight and you’re looking to pay back a small portion monthly in order to manage your finances on a monthly basis, then look at paying back over a longer period of time.

Now, how much of a loan should you take out? First you need to figure out what the deposit will be and will you require money for the move itself. Since you want to get the entire loan from one source, so you won’t be burdened with too many monthly payments, finding out the usual amount of deposits being requested in your area is vital.

Are the agents asking for £500, £750, £1000 or more for deposits?

Okay, so now you’ve decided how much you need and how quickly you’d like to pay it back. The next item you should be checking into is the APR (which stands for Annual Percentage Rate). Shop around for the best rate as this is the interest rate you’ll be paying on the money you borrow and is an extremely important consideration.

Obviously you’re looking for the lowest APR so that the amount you pay back is the least amount possible. For instance if you borrow £1000 at 10% APR, you will be paying £100 over a 12 month period for a total payback of £1100. Be cautious when looking at the rates because some rates will appear higher if a short term loan is being listed for a 12 month term even if the loan is only for 1 month.

The loan market is always very competitive and there are many companies all vying for your business. As with any portion of the rental process, each decision is what you feel is best for you and what you feel most comfortable with once the decision has been made. Shop around and you should find a perfect match for your needs.




June 2024
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