As the Economic Survey 2017-18 report shows, around 28% of city dwellers in India reside in rented houses. This increase in rental accommodation owes to better job and business opportunities. However, excessive security deposit and other relocation expenses make renting a distressing experience for many tenants. It is where apersonal loan for security deposit comes in.
Such customised rental deposit loans enable tenants to face the initial financial strain strategically. They can utilise the credit for multiple purposes, including security deposit, brokerage, etc., as well as settle down and stabilise their financial condition effortlessly.
However, applicants often make costly mistakes when availing personal loans for security deposit. So, if you are planning for the advance, check out what you should avoid.
#Mistake 1: Applying for a loan without financial assessment
Budgeting is a crucial factor to consider when availing a loan.
Renting an apartment comes with various charges, including security deposit of 8 to 10 month’s rental quantum, brokerage, relocation expenses, etc. Tenants also need to ensure sufficient funding for furniture purchase, AC/geyser installation, water connection, plumbing services and other ancillary costs.
As a personal loan for security deposit addresses several requirements without end-usage restriction, a financial assessment of all the expenses is necessary. It helps in applying for the appropriate loan amount.
#Mistake 2: No strategic plan for repayment
Like budgeting, having a repayment plan is also essential to eliminate probabilities of default. It is crucial to establish a balance between monthly instalments and tenor. Rental deposit loans come with flexible tenors of up to 36 months.
The EMIs are lower with a longer tenor, but the cost of the loan is higher. Contrarily, EMIs are higher with a shorter tenor, and the cost of the loan is lower. Borrowers should thus plan out their finances and select a repayment schedule accordingly.
Defaulting on an unsecured loan may not involve the asset confiscation risk, but it severely hurts the borrower’s CIBIL. Poor credit profile lowers any chances of loan approval further. So, make sure to apply for a loan amount which you can repay conveniently without straining your pocket.
#Mistake 3: Interest rates are the only charges applicable
The fact is, interest rates are not the only charges associated with a personal loan for security deposit. Borrowers need to pay a few other fees or charges such as processing fees, penal interest, bounce charges, statement charges, etc. When availing the credit, know about its associated costs and hidden charges, if any, to assess its affordability. These can increase the cost of a loan significantly, making it expensive.
#Mistake 4: Ignoring CIBIL score and credit history
CIBIL score plays a crucial role in the approval of an unsecured personal loan. Every lending organisation goes through an applicant’s credit history to understand his/her financial behaviour, and hence, creditworthiness. So, you should strategically manage your finances throughout that help build a healthy credit history and maintain a CIBIL score above 750.
Some healthy financial habits to maintain good CIBIL report are:
- Lower your existing debts.
- Keep credit utilisation ratio below 30 – 50%.
- Make timely bill payments.
- Read credit card statements every month.
An impressive financial profile always increases your approval chances of a personal loan for security deposit.
#Mistake 5: Not reading the terms and conditions thoroughly
One of the biggest mistakes applicants can make is not reading the terms and conditions carefully. Often, facilities like loan foreclosure or part prepayment are offered against certain applicable charges. Borrowers must clear their doubts and be aware of such terms and clauses before signing a loan agreement.
Advantages of a rental deposit loan
If you avoid the mistakes mentioned above, rental deposit loans from lenders like Bajaj Finserv can offer numerous benefits. Below are some of these:
- High-value financing of up to Rs.5 lakh.
- Affordable rates of interest.
- Quick loan processing and disbursal within 24 hours.
- Convenient repayment tenors.
- Part-prepayment facility, any time.
- Unique Flexi Hybrid feature to reduce EMIs considerably.
- Nominal associated fees and no hidden charges.
Once you fulfil the eligibility criteria, you can conveniently fill up the rental deposit application form online and submit along with minimum documentation. Reputed lenders provide value-added services like drafting and registration of rent agreements at customer’s doorstep.
Rental deposit loans are designed to ease the process of relocation within the country financially. So, ensure to gather proper knowledge and avoid the mistakes mentioned above while applying for the credit. Free yourself from unnecessary emotional and financial stress with the best personal loan for security deposit.