While scouting for rental properties can be exciting, the endeavour also demands sufficient liquid finance and knowledge of all the associated costs such as the security deposit, and what each cost means. While you can take care of this cost with a security deposit loan, it’s best to understand the differences between the terms and types of charges before you make any payments.
For instance, ‘rent deposit’ and ‘security deposit’ are often used interchangeably. In most cases, there is no difference between a rent deposit and security deposit. When they do differ, the following are the factors that may set them apart.
Purpose: To cover damages, apart from regular wear and tear, to the rented property
Amount: Equal to 2 to 8 months’ rent
Refund status: Refundable at the end of the lease, with the amount specified in the agreement
Purpose: Used to secure the apartment before the lease agreement is signed
Amount: Equal to a few weeks’ rent
Refund status: Refundable/non-refundable
Example: You agree on 15 April 2020 to rent a 2BHK flat in Bangalore from 1 May 2020. You are charged 8 months’ rent as a security deposit and 1 month’s rent to hold the apartment. If the rent is Rs.16,000, this would mean a security deposit of Rs.1.28 lakh and a rental deposit of Rs.16,000. If you sign the agreement, the rental deposit goes towards the security deposit or first month’s rent. If you fail to do so, you must forfeit it. At the end of the lease, the security deposit is returned to you.
With these expenses routinely exceeding Rs.1 lakh in cities like Mumbai, Delhi, Bangalore, and Pune, you may consider taking a security deposit loan to keep your savings from bearing the brunt. Lenders like Bajaj Finserv offer Rental Deposit Loans of up to Rs.5 lakh to cover:
- The security deposit
- The rent deposit
- Brokerage fees
- Packing and moving costs
What’s more, you can enjoy an add-on My Home Cover by Bajaj Allianz and doorstep services to register the rent agreement with this security deposit loan, as well as a repayment tenor of 36 months, disbursal in 24 hours and a Flexi Hybrid facility.
To begin, simply check your pre-approved offer today!
Must Read: 4 Things Every House-Owner Should Do Before Renting Out Their Property