Urban India has 21.72 million rented households, and in the future, the number is only set to grow. If you live in Mumbai, it’s not hard to imagine why. Most young professionals prefer to rent than buy, opting to live closer to workplaces, and easily give up accommodation when better job prospects arise in another city or country – or if a flat just across the street fits the budget better.
Rents can be high in prime locations anywhere, though most renters struggle not with their monthly payments but with the high security deposit, which typically equals 6 to 11 months’ rent. This is where rental deposit loans come in. Offered by digital platforms like LoanTap and CASHe, they are designed to eliminate the burden of this upfront payment.
Will you end up struggling with rent and an EMI on the deposit? They promise it’s less painful than you’d think.
LoanTap’s rental deposit loans range from Rs 1 lakh to Rs 5 lakh. They charge an annual interest of 1.5%, and offer repayment tenure of between 11 and 33 months, depending on the duration of the lease.
Co-founder and CEO, Satyam Kumar, says the majority of takers for such loans are in Mumbai, Bengaluru, Chennai and Pune. “A potential borrower must complete an online application and upload relevant documents to the company’s website. The application is then assessed and verified by LoanTap, and the loan, if approved, is disbursed within 24 hours. After that, the principal amount is deposited with the landlord. When the customer vacates the house, the principal amount is repaid.”
Now, the borrower has to pay only the interest until the lease is terminated.
Eila Qureshi, a renter in Bengaluru, reached out to LoanTap in September for help with rental deposits. “It was a hassle-free experience,’ she says. “I did not have to roam around to submit documents. In fact, I did it online. I got the loan quickly and smoothly.”
Another digital platform, CASHe, facilitates loans for rental deposits. They’ve partnered with property platform MagicBricks, which lists rental properties and indicates how much of a loan you might need for a security deposit for a particular apartment.
As with LoanTap, the site offers advice on how to apply for a loan and documentation required. CASHe CEO, Ketan Patel, says that for much of India’s migrant workforce, this is better than scrimping and scrounging to raise money for a renter’s deposit.
Anirban Gupta, who availed of a rental loan from CASHe, says his loan was approved in less than 24 hours. “It’s very impressive because compared to traditional institutions, which decide your loan eligibility on a standard CIBIL score; CASHe uses their own credit rating mechanism,” he says.
Shobhit Agarwal, MD and CEO of realty consultancy Anarock Capital, says that as more young professionals and millennials opt to rent, they’re more likely to choose speed and convenience with applying for a deposit loan too.
“These are different kinds of lenders because their whole back end is technologically driven,” adds Amit Gupta, head of debt and capital markets at realty consultancy JLL India. “Their customer interactions and credit underwriting are done digitally, with minimal personal interaction. And their ticket sizes are much smaller.”
They’re also reaching out to the growing gig-economy generation – professionals who work freelance, often out of home or a coffee shop, and prefer to sign up for consultancies rather than salaries, which traditional lenders ignore.
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