If you do not pay rent on time, your landlord will throw you out of the house. Finding affordable accommodation is no longer easy now, especially when you are in a tight spot. Due to the current scenario, it is challenging for people to keep up with rental payments. Most of the people are working on a pay cut while others have been made redundant.
When you have already taken on loans for people on benefits, it cannot very easy to have enough money to pay for the accommodation. In some cases, landlords are also being entrenched. They are not ready to allow for a grace period because they also need money. The pandemic has taken a toll on everyone, and it is not over yet.
You may prefer to take out a loan to pay the rent when you are in a tight spot, and the amount of money you will be borrowing depends on how much you could pay out of your pocket. Well, taking out a loan to pay rent can be an expensive option even if you have some savings to pay half of the rent because you are to pay it back along with interest.
This is very simple to understand the fact that you are asking for it. How would you pay off the debt that involves interest payments when you cannot pay the rent from your pocket? Your credit score will also be dinged if you fall behind repayments. If you are planning to take out a loan to pay the rent, you should consider the following factors:
Borrow if you are sure that you can make payments
If you have no option other than borrowing money, you should find out your affordability. Calculate how much money you will need to pay down every month and how long.
Further, make sure that you can pay down that money without compromising your essential expenses. Otherwise, you will end up borrowing to finance your regular household expenses, which will lead to racking up debt.
You will have to create a budget to take stock of your spending. You may have to stick to a lean budget until you have paid off the whole of the debt. It will cover only essential expenses and the rest money you will set aside for emergency corpus and loan payments.
You find that your futuristic conditions will not drown you.
Although a lender will check your affordability to decide if you can afford to make the payment, they do this by considering your financial condition. For instance, if you are taking out non-guarantor loans, the lender will see your present income situation.
They may ignore to take into account unexpected events that can make it challenging for you to keep up with payments. If you are financing rent, ask yourself if you have enough money to continue to make payments if:
- You lose your job and take a bit long time to land a new job.
- You fall sick or come across a medical emergency.
- You come up with an emergency like your car break down, or you have to go to see your friend or family urgently who live out of town or city.
Your credit score is at least fair.
When your credit rating is low, borrowing money can be very expensive because you will get a deal with a high-interest rate. Try to take out a loan when you have at least a fair credit score. This can help you get money at affordable interest rates.
What are the other options?
You should not borrow to pay rent if you suspect that your financial condition will not be smooth and steady until you settle the whole of the debt and your credit score holds you back from getting a deal at affordable interest rates. Here is what you should do when you cannot take out a loan:
- Negotiate with your landlord
If you have been making payments to your landlord on time, you can negotiate with them. Tell them why you cannot pay rent this month or how much you can pay this month. Be genuine, do not exaggerate your financial condition.
Your landlord might be willing to help you. They can allow you to make minimum payments or allow for a payment holiday until you bounce back. However, make sure that you can tell them when and how you will improve your financial situation. This is because no landlord will wait for a longer time.
- Increase your income sources
Try to find money-making ways. Do some online research to find out what kind of work is available in the market. Find out which work you fit in and then put in the applications. It can be a bit hectic to do a second job along with a full-time job or business, but you will have to do it to make ends meet.
- Ask your family or friends for help.
Assistance from your friends and family can be a better option than taking out a loan, At least you can escape paying interest. Tell them you need the money and when you can payback. Make sure that you do not betray; otherwise, they will never help you in the future.
If you are struggling to pay rent and looking to borrow money, make sure that you can afford to pay it back. However, a rule of thumb says that you should consider other alternatives first. Take help from your family or friends, negotiate with your landlord, and above all, increase your income sources.