By 
When moving to cities like Bengaluru, Mumbai, or Hyderabad, the primary problem that individuals face is that of availing accommodation. The immediate next issue is usually about the payment of security deposit and brokerage fees, given the big-ticket amount required by landlords in these cities. Under such circumstances, a rental security deposit loan can provide the necessary sum needed to meet these high-value expenses.
The following includes a breakdown of the average security deposit amount in a few Tier 1 cities –
Bengaluru
- Average rent for a 2 BHK flat – Rs.20,000.
- Average rent for a 3 BHK flat – Rs.35,000.
- Security deposit – Up to 10 months.
Mumbai
- Average rent for a 2 BHK flat – Rs.35,000.
- Average rent for a 3 BHK flat – Rs.70,000.
- Security deposit – 4 to 5 months.
Hyderabad/Pune
- Average rent for a 2 BHK flat – Rs.20,000.
- Average rent for a 3 BHK flat – Rs.30,000.
- Security deposit – 2 to 3 months.
Reasons for high rent and security deposit
- Vast employment opportunities
The primary reason behind such high accommodation costs in these cities is the employment market –
- More than 40% of India’s IT sector is located in Bengaluru.
- Hyderabad’s employment rate increased by 19% Y-o-Y in May 2019.
Cities like Pune and Mumbai have also contributed to massive job creation in several fields other than engineering.
- Property damages
Many a times, tenants cause damages to the property, which has to be repaired by the landlord from his/her pocket. In such situations, a high-valued security deposit can protect him/her financially.
- Untimely evacuation
There have also been cases of tenants evacuating without paying outstanding rent. Such situations can also be eliminated when landlords charge a security deposit.
Even when leasing a flat with a minimum rent in these cities, the security deposit can cross the Rs.1 lakh-mark. For any individual, especially those who are newly-employed, arranging such a sum can be substantially challenging.
Hence, a rental security deposit loan is an ideal way to finance such expenses without withdrawing your savings or breaking a deposit.
Some of the features of such loans that extend considerable benefits to borrowers include –
- Online application within minutes
Filling a rental deposit online application form takes a few minutes as you have to provide only a few details. After submitting, a representative of the lender will contact you to collect the documents and process your application.
- Fast application processing
NBFCs can process a loan application within 24 hours after you apply. Thus, you can quickly arrange for funds and secure a flat while minimising the chances of it being passed on to anyone else.
- Simplified documentation process
A rental deposit loan is approved against the following documents –
- Aadhaar, PAN, Voter ID, Passport, Driving License, etc. (anyone).
- Bank account statements.
- Latest salary slips.
- Rental agreement.
The above list is indicative; a lender may ask for other documents in addition to the ones mentioned above.
- Loan for any purpose
Lending institutions like Bajaj Finserv offer up to Rs.5 lakh as Rental Deposit Loans. You can use a rental security deposit loan to pay for.
- Security deposit,
- Brokerage,
- Furnishing, etc.
These loans have no restrictions on how you use them; hence, you can pay for any expenses related to your accommodation.
- Flexible repayment tenors
The repayment period for rental deposit loans usually stretches up to 36 months. Make sure to select a tenor based on the EMI that you can afford.
A longer tenor lowers the monthly installments while a shorter tenor reduces the total amount payable.
For instance, say you have availed a rental deposit loan of Rs.3 lakh at an interest rate of 12% per annul. The EMIs and the cost of the loan for different tenors will thus be –
20 months –
- EMIs – Rs.16,625.
- Cost of the loan – Rs.3.32 lakh.
36 months –
- EMIs – Rs.9,964.
- Cost of the loan – Rs.3.58 lakh.
It is advisable to use a personal loan EMI calculator to assess your monthly installments and choose the right tenor before applying.
- Value-added services
Under value-added services, lenders can offer a finance report that tells your current creditworthiness and financial position. You can also avail personalised insurance policies like a card protection plan, which financially protects your credit and debit cards when you lose or misplace your wallet.
Availing a rental security deposit loan is highly beneficial for those moving to such Tier 1 cities. You only end up paying the interest on your advance; as the principal, provided as a security deposit, will be refunded when you vacate the property.
Must Read: Opt For a Personal Loan For Security Deposit in Mumbai?
