Credit for deposit

If you want to move into a new apartment or house, you not only have to sign a rental agreement, but in many cases you also have to pay a rent deposit. It is considered collateral and is managed by the landlord in a separate account. The landlord has the possibility with this deposit to settle open claims regarding the rent or repairs that have arisen due to improper use of the property and were caused by the tenant.

As a rule, the deposit is in the amount of three cold rents. This means that as a tenant you have to come up with quite a large sum just to be able to rent the property. In addition, there are then the costs of renovation and the actual move.

Several thousand euros are there quickly accumulated, which many consumers have not saved and therefore face the question of how the deposit for the rent and all the other costs can be raised. A loan for the deposit could be the solution.

A loan for the deposit – guarantee, overdraft facility or installment loan?

As a tenant, you have several options for taking out the loan for the deposit. Relatively new and therefore also interesting is the rent deposit guarantee. This is not a loan, but a kind of insurance policy. If you as a tenant cause damage to the rented property or you do not pay the rent in full, the insurance company will step in. Here the insurance settles directly with the landlord. The policyholder, i.E., the tenant, simply pays an annual premium into the rental deposit guarantee policy. The fact that it is not necessary to take out a loan for the deposit can be seen as an advantage. However, the disadvantage is that the money paid into the guarantee is not paid out again in the end. In addition, many landlords do not recognize the guarantee and want a direct payment of the deposit.

But what do the other two options have to offer?

The dispo as a loan for the deposit

The dispo as a supplier of the required rent deposit may be a very convenient solution to the problem. Because it usually does not have to be applied for first, since it is already provided by the bank when the current account is opened. In addition, it contains enough money to be able to cover the cost of the deposit. On top of that, the repayment of the money, i.E. The balancing of the account, can be freely arranged.

Less beautiful, however, is the fact that the dispo comes with very high financing costs. On average, the interest rates are 11 to 15 percent. This is double to triple compared to a normal installment loan. In addition, the use of the overdraft facility eliminates the flexibility of the current account. Because if the dispo is exhausted, it offers no possibilities for spontaneous investments and the bridging of further financial bottlenecks.

The installment loan as a loan for the deposit

Last but not least, there is the normal installment loan, which can be used as a loan for the required deposit. As a small loan it is available at almost all banks. Depending on the creditworthiness of the borrower and depending on the duration of repayment, the effective interest rate is designed by the banking houses. It usually ranges between 3 and 6 percent.

For the installment credit speak thus the low interest costs and few collateral, which must be furnished around the credit. The security deposit can be paid on time with the help of the installment loan and will be repaid with interest at the end of the tenancy – as long as no damages have been incurred by the landlord.

Against the installment credit speaks the financial burden, which arises monthly by the repayment. However, since these can be influenced individually by aligning the installment amount based on income and the free available budget, the financial burden is not very significant and should be feasible even with a smaller income.