Can’t Afford Rent, Should You Get A Loan To Pay It?

Alright, let’s be honest here.

Renting a flat is much cheaper than buying or building a house. Aside from the regular, you will also have to pay a closing cost and down payment, which is a headache.

Even so, renting an apartment isn’t too cheap.

Besides the obvious ones, like paying your utilities, the other expenses that you must consider taking care of are –

  • Moving fees,
  • The rent for the first and the last month,
  • Pet deposit (if you have one),
  • Storage and parking costs,
  • Security deposits.

If you don’t earn much, then opting for a loan can be a solution to your problem.

However, although this is an alternative, will it be ideal for your cause? Most importantly, does it really make sense to get a personal loan to take care of your rent?

Let’s find out.

When Is It An Excellent Plan To Get A Loan?

A rent loan usually comes with various additional expenses, like fees and high interest. Due to this reason, most people tend to avoid taking out one…, and they’re right about it.

It’s not really a great idea to take out a loan unless you are in dire need of it. However, there might be some circumstances where borrowing money can be ideal for you.

For instance, if you’re experiencing a temporary financial setback, but are about to get a job, then taking a loan does make sense. This way, you can afford to pay whatever you have taken within a short period of time and minimize the interest charges.

When Is It A Bad Time To Get A Loan?

When you’ve lost a job recently, the course of taking a loan might seem to be the best option for you. Unfortunately, it’s not.

Having a low account balance can affect your credit score massively. Hence, if you try to take out a loan during these circumstances, they might reject your application right away.

Even if they accept, the overall interest rate will be pretty high. As you won’t be able to repay the loan quickly, the general course of payment will increase even more.

In this aspect, you’re probably better off asking your landlord about a payment plan or enrolling in a rental assistance program.

Types Of Loans To Go For When Paying Rent 

Personal loans tend to be pretty much unsecured. Thus, with them, you would not have to offer collateral or an asset to secure the lending money. However, if you want to opt for something else, you may also try out other personal loans.

Keep reading to learn about them.

Unsecured Personal Loan

As mentioned before, this type of loan usually does not have an asset regulated with them. Hence, it can be pretty risky for the lender. If you are in a hurry, you may also need to find a reliable hard money lender offering fast rental loans commonly known as bridge loans. Such a circumstance can, sometimes, lead them to charge a much higher interest rate than usual.

Besides, to check your repaying ability, the lender will check your DTI ratio (debt-to-income) and credit score. Some people tend to keep an eye on your monthly and yearly income too.

If you don’t meet the requirements of the lender, they might also cancel your loan application without any prior notice.

Emergency Loan

Like the former, it’s a type of unsecured loan as well. However, in this aspect, you can only take it while covering emergency expenses like rent payments and medical bills.

These types of loans generally come in smaller amounts. For example, if you want, you can borrow as low as USD 250 to buy medicines or something as such.

Secured Personal Loan 

Unlike the unsecured option, you will need to pledge something, namely your house or car, to get the loan. This way, if you end up not paying the debt, the lender can satisfy the debt by repossessing the provided collateral.

The risk of being neglected or rejected is pretty low in this aspect, as you are already offering something to secure the loan. In some cases, you might get a low interest too for your cause.

Final Thoughts 

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