Can I use Payday Loans for a Rent Deposit?

If you need to rent a new property, then you will need to pay a deposit. This means saving up a sum of money and it is not always easy to do. If you are currently renting and you are moving, you could find that you will not be able to get back the deposit on the place you are in until you have moved out and it has been inspected so you will have to find an alternative sum of money for the deposit beforehand. This is not always easy to find and so you may be thinking about borrowing the money in order to pay for it. This can seem like a good solution but there are potential risks and it is worth thinking about these before you decide whether to go ahead with the idea or not.

May not get Deposit Back

If you do not get your deposit back form your previous property and you were relying on using that to repay the money that you have borrowed, then you may struggle to repay the loan. Therefore, it is wise not to rely on having that money available to you to use, but make sure that you have an alternative plan to be able to afford the repayment. Think about whether you can sell things to make money, earn a bit extra or spend less elsewhere so that you will have enough. Actually do the maths and work it out, so that you can be confident that in the case of you not getting your deposit back, you will still have the money available to repay the loan.

May Struggle to Pay Rent and Repay

If you do not have a deposit to use to repay the payday loan, then you will have to find the money elsewhere. It could be really difficult to find it when you are having to pay rent as well. This could particularly difficult if you are moving out of your parental home and you are not used to budgeting and do not know what to expect with regards to the cost of paying bills. Therefore, it is really important to make sure that you check carefully whether you will be able to afford it. Make sure you find out how much bills are likely to cost you and this should help you to be able to check carefully whether there will be enough money to cover the bills, rent and loan repayment.

There Will be Costs

Whenever we take out a loan, we have to pay for it. Loans differ in cost and it is really important to make sure that you work out how much the loan will cost you and then you will be able to work out whether you think it will offer good value for money. There is the alternative of saving up the deposit and delaying moving which will be a lot cheaper and so is well worth consideration.

May Impact Credit Record

It is also worth noting that when you borrow money it will show up on your credit record. Although this one instance may not necessarily be seen as a bad thing. If you miss a repayment it almost certainly will and could impact the likelihood of you being able to borrow in the future and perhaps may mean that it will be hard to move house as landlords do a credit check and it might even put off potential employers. So, it is a really important thing to get right and so you need to think really hard about it and whether the pros and higher than the cons and therefore whether the risk is worth it.

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