Scores of young professionals from across India migrate to metro cities like Bangalore, Chennai, Pune, Mumbai, and Delhi NCR seeking better career prospects with improved remuneration. As these cities continue to attract significant chunks of the population courtesy economy, sectoral growth, and robust infrastructure, accommodation becomes a critical problem. A rental deposit loan thus comes to the turf as an ideal financial solution to accommodation-seekers in these cities.
As per the current scenario, most young professionals opt for a leased property instead of purchasing a home in such situations. To match this rising demand for accommodation, tenants charge high rent, and even more tolling security deposits. Such deposits in these cities can be north of Rs.90,000. An amount that substantial can severely impact one’s savings, especially if it’s a newcomer.
To mitigate such a financial burden, especially during relocating, financial institutions provide a rental deposit advance.
Essential features of a rental deposit loan
Relocation to a different city or even in the same city is a hassling and expensive process. It entails not only rental deposits but also other ancillary expenses such as brokerage costs, furnishings, packing and moving charges, etc.
To meet these expenses, you might consider a rental deposit advance available with the following beneficial features.
- Loan amount
NBFCs such as Bajaj Finserv provide up to Rs.5 lakh as a Rental Deposit Loan. Such an amount can be sufficient to meet the security deposit amount as well as other adjunct expenses. Also, the processing time for this category of loans is short, tentatively 24 hours.
- Repayment tenor
In case of security deposit loans, repayment tenor ranges up to 3 years or 36 months. It provides you with the convenience and flexibility to repay as per your financial capacity.
Documents associated with availing these advances are minimal to ensure a hassle-free process. You just need to submit a duly filled rental deposit loan application form accompanied with a few necessary documents like identity and address proof, rental agreement, etc.
- Part-prepayment facility
You can also choose to prepay a part of the loan to reduce the predetermined tenor or EMI amount. In case you find yourself in a more stable and better financial position, you can utilise a portion of such a hike to mitigate your loan obligation without any additional charge.
- No end-usage restriction
A rental deposit loan does not feature any end-usage restriction. It purports that you can utilise the loan amount to meet various expenses related to your relocation aside from security deposit, advance rent, or brokerage fees. For instance, if you want to install an AC or a water purifier, you can do so using this credit facility.
What are the steps to consider before availing a security deposit loan?
Before availing such a loan, you need to consider a few steps which shall aid you in the process. They include –
- Choosing the loan amount
It might be to your benefit to first determine the amount you need to meet your relocation expenses.
Consider the amount you need for a security deposit and brokerage cost. Also, list out the ancillary costs to estimate the total expenses required for securing accommodation.
This process will allow you not to borrow more than you need, which may otherwise add to your financial burden.
- Opting for a suitable tenor
Alongside the loan amount, it is also crucial to choose a tenor that is compatible with your current and prospective financial positions. As both the tenor and the loan amount are principal determinants of EMI, opting for the right tenor will eliminate an unwarranted financial burden.
- Selecting the right lender
Once you have chalked out the essentials of availing a loan, decide on a lender that suits your requirements and convenience. Financial institutions such as Bajaj Finserv provide doorstep services available in cities such as Pune, Bangalore, and Mumbai. Along with that, its representatives take care of the legalities related to the rental agreement on your behalf.
While considering a lender, you shall take into account the accompanying costs of availing a loan such as processing fee, stamp duty charges, etc.
Your decision shall be based on whether you can afford to pay a high-value security deposit amount and other expenses related to relocation at one go or not before you apply for rental deposit loan. Also, make sure to confirm eligibility before applying to improve your chances of loan approval.