Deposit loan – deposit guarantee or would you prefer to take out a loan? The dramatically increased rents cast their shadows before moving in. A three month rent deposit is no longer an exception. “Where to get from, if not to steal” is not the only question facing young people who are moving into an apartment for the first time.
Deposit credit – the possible sources
The rental deposit can be fed from various sources. The deposit guarantee of large insurance companies is primarily advertised as a surety loan. Instead of depositing a deposit, they guarantee liability to the landlord. The insurance companies are involved in the event of a possible loss of rent as well as in the event of damage to the rental property. A bank’s guarantee works in a similar way to insurers’ offers.
The most common method of paying a deposit, however, is still financing via credit. It would be possible to use the previous deposit and exhaust the overdraft facility. With the development of rental prices in recent years, however, an ordinary overdraft facility is hardly enough. For this reason, an installment loan is increasingly being used for the deposit.
Advantages and disadvantages of the insurance guarantee
The biggest advantage of a deposit guarantee for the tenant is the moderate monthly insurance premiums. In addition, his deposit is not in danger if the landlord goes bankrupt. A disadvantage is the low acceptance of the landlords, who prefer cash payers. It should not be forgotten that a security deposit can never be paid off by the insurance company. The insurance premium runs until the end of the contract, usually the move. Despite constant monthly payments, no money was saved for the next deposit. The guarantee only postponed the problem of having to pay a high rent deposit.
For an experienced landlord, the insurance guarantee is a red flag. In the event of damage, he will likely have to deal with the insurance company’s lawyers. In the end, even if he gets money, going through the instances is full of risks. In addition, he cannot let the rent deposit work for him to save interest.
One reason for the high rents of the present are the insulation and renovation measures required by law. The tenant is now saving heating costs, but the landlord had to dig deep into his pocket. The three monthly rent deposit helps him to reduce his interest burden. Acceptance of the guarantee means for landlords only an increased litigation risk and loss of interest of often several hundred USD a year.
Installment loan for the deposit
An installment loan for the deposit can only be a disadvantage if there are already existing creditworthiness problems. Then it is harder to get it at low interest rates.
With the installment loan, the tenant has the advantage of being a cash payer of the deposit. This ensures the first good impression at the landlord. In addition, other relocation costs, combined in one loan, can be co-financed. Each installment loan as a deposit loan is paid off once. However, the deposit remains intact and thus becomes a savings cushion for the future.