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If you use a personal loan to pay the first few months of your rent in advance or to pay your entire lease in advance, a flexible landlord might offer a discount on the rental rate.

Having the funds of a personal loan to back you up in the beginning, might be able to help you save some cash on rent in the long run.

Cons to Paying Rent With a Personal Loan

Despite possible advantages of using a personal loan to cover rent, there are also some disadvantages you need to know about.

1. You’ll pay interest on the loan

Personal loans involve interest, so the amount you pay back will be more than what you actually paid in rent.

If you get a $10,800 personal loan with a 36-month term at 6% interest, you’ll pay about $328 a month. You’ll also pay an additional $1,028 in interest over the course of three years.

2. You’re putting yourself in debt

A personal loan puts you in debt, and this type of debt is different from buying a home because an apartment isn’t an asset.

Each mortgage payment builds equity and puts you closer to owning the property outright. Getting into debt to cover rent doesn’t increase your personal net worth. And unlike a mortgage, rent continues indefinitely.

3. You may underestimate your financial needs

If you’ve never lived on your own, you could underestimate your monthly expenses and borrow less than you need. Unexpected costs can create a financial bind and leave you cash-strapped.

You may anticipate needing $900 per month for the next 12 months and only borrow $10,800. If you end up spending an extra $150 a month, you’ll spend more than you allocated for each month and you’ll run out of money sooner than expected, making it difficult to cover your rent.

4. Can be harder to get a loan with no credit

Even though you can get a secured personal loan with no credit, there are no guarantees. Some lenders may reject your application if you don’t earn enough, or the bank may require a cosigner. This is someone who agrees to take responsibility for the loan if you default. (más…)

For those who have little or poor credit background, you can find available options to you personally with regards to saving and controlling your money.

This article will show you how your credit score might have an effect on the bank accounts accessible to you, and just how possible get ready to open up a banking account. You will understand how it is possible to manage a banking account to boost your own credit rating.

Do finance companies operate a credit assessment when opening an account?

Once you submit an application for credit cards or financing, the bank must complete a credit score assessment to determine how much cash they can give to you. (más…)