You want to move but the landlord wants you to pay the first month’s rent plus a security deposit. So what if you don’t have that kind of money? Can you get a loan for rent payments and a security deposit?
Sure, depending on how desperate or stupid you are. There are payday lenders willing to give you up to $500, and you can obtain 3 or more of these at a time to find quick cash. There are lenders that specialize in intermediate-term usurious loans that may lend up to $10,000. The embattled Western Sky Financial is just one such lender.
The fact is, predatory lenders are everywhere. If high interest lending is banned in your state, then you can still find someone willing to lend you money on the internet, even if the loan is illegal in your state.
If you have stable income and a good credit rating, then you may likely obtain a reasonable interest rate loan through your bank or credit union. While these loans may get you into your apartment or rental house, you really have to consider whether you will be able to consistently afford to make both your regular monthly rent payment as well as the additional loan payment.
At some point, you have to evaluate your budget to see whether or not you can even afford your current and future lifestyle. An inability to save a few hundred bucks for a security deposit is a sign of serious financial problems.
There are landlord practices that do contribute to the difficulty of some renters being able to move:
- Delays. Security deposits are generally refunded at the end of a 30 day period that begins when your lease expires. That means you cannot use those funds to put down a deposit on your new place.
- Additional Fees. Some landlords abuse their powers to tack on additional cleaning fees or repairs. Many tenants end up getting charged for items that were within the normal wear and tear guidelines that were outlined in the original lease document. These fees can quickly make a security deposit disappear.
- High Entry Requirements. While some apartments may reduce the security deposit or provide free rent credits as a promotion, other housing options may require much more. For example, in Rhode Island it is typical for a landlord to require the first month’s rent, last month’s rent and a full month rent for a security deposit. On a $1,400 a month house, that would mean $4,200 would be due upfront.
- Application and Credit Report Fees. Many applicants can expect to pay $60 or more just to cover the cost of having an application reviewed and credit rating checked.
To make matters worse, some landlords who are financial duress themselves may face foreclosure. In some of these cases, your security deposit has likely been spent and is no longer available for a refund.
If you must move and need to borrow, consider the options carefully before obtaining a loan for rent. Otherwise, you may be setting yourself up for even greater financial hardship.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."