Moving to a new apartment is always associated with high costs. In addition to the current moving costs and possible additional costs, such as the renovation or furnishing of the new apartment, there is usually also a deposit. The latter serves to secure the landlord’s financial security and may amount to up to three net cold rents, which quickly leads to four-digit amounts.
But what options are available to the tenant if he simply does not have the deposit at hand?
First of all, according to the current tenancy law, it is possible to pay a rental deposit within three monthly installments, with the first installment being paid at the start of the lease. In addition, the amount of the rent deposit must not exceed three times the monthly rent (more on this here). Such an installment payment cannot be excluded by a rental agreement. However, the landlord has a special right of termination if the landlord is in default.
However, many tenants are not really helped by this legal loosening of the repayment, since the period of three months is extremely short and the new regular rent must already be paid. In the following, we would therefore like to clarify what other options are available to the tenant in order to make the deposit amount safe and as cheap as possible. It is also important to know which advantages and disadvantages result from the individual financing options.
What financing options are available for a rental deposit?
Small loans as a deposit solution
The small loan: A classic option would initially be the online small loan, which is typically smaller loan amounts. In view of the fact that a rental deposit must not exceed three times the monthly rent, we can assume exactly the right loan. You have the opportunity to compare numerous such small loans and to choose between them.
A small loan has the advantage that the banks do not have too high security requirements; the credit is therefore granted to most applicants (provided they have sufficient creditworthiness). For many tenants, however, the fact that the deposit can be paid in full in advance thanks to a small loan is just as crucial. On the part of the landlord, such an advance payment is interpreted as proof of one’s own solvency, which strengthens the trust between the contracting parties. After borrowing, a direct cash deposit would be possible.
A small loan is also associated with disadvantages. The borrower must repay the loan over the selected term, which represents an additional monthly charge. Since there can always be unforeseen events during the term, the small loan represents an additional financial burden. In addition, a small loan must first be compared, applied for and approved, which takes time. We help you to take this step as quickly as possible and free of charge for you.
Use overdraft facility for deposit
The overdraft facility: Alternatively, the tenant can simply take out an overdraft facility, which is colloquially known as “overdrawing” the account. To do this, they only need a checking account with which a credit facility is possible.
The advantage is obvious: the tenant can quickly get the desired amount without having to use an additional financial service provider.
However, this comfort quickly reaches its limits and has disadvantages. The amount of an overdraft facility is limited and is often not enough to pay an entire deposit. Interest rates are also significantly higher than for a small loan. If the overdrawn account cannot be settled promptly, a real cost trap is lurking here. Because even a overdraft facility has to be balanced at some point: the longer you take your time, the higher the interest payments will be! On average, customers have to pay around 10% pa interest on their overdraft facility, according to a test.de test conducted in 2018.
Use deposit guarantee for objects
The deposit guarantee: As a third alternative, the tenant has a deposit guarantee. With this, the tenant neither has to take out a loan nor pay the deposit to the landlord. Instead, he pays an annual contribution to a surety. This in turn guarantees the landlord to pay for possible damage to the apartment or rental property that would otherwise be covered by the deposit.
Thanks to a deposit guarantee, the tenant does not have to pay the deposit at all, but only has to pay the low annual costs of around 5% of the deposit amount. The guarantor can be your own bank or a specialist provider of rent guarantees. Before applying for a guarantee, please talk to the landlord whether he will accept this form of deposit. Some landlords only want to rent objects with a cash deposit, so that one would fall out of this form with some objects.
However, the disadvantages of the surety are noticeable in the long term. While the tenant generally receives the security deposit in full after the tenancy has ended, the insurance contributions remain with the provider of the security deposit. In addition, the landlord is not legally obliged to accept a surety bond.
An online loan with very low interest rates as a deposit solution
If you are planning to move, but the deposit exceeds the current financial options, a loan is the best option. The online loan (or even with negative interest) is particularly interesting as a cheap deposit solution, with which the deposit can be deposited quickly and efficiently. We help you to find the loan that is right for you and the deposit you want. In addition to the low interest rates, we also offer cheap loans with a free total repayment. You can therefore repay the loan at any time if your financial situation allows it.