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If you are looking to fund rent as a student and borrowing money, you can surely do it, but to be honest, there is no sort of a term like rent loans for students exists. You can call them rent loans, but actually, they are simply cash loans you want to take out to finance rent.
If you are a student, you may have taken out a student loan. As the name suggests, it is used to cover your educational expenses, including college fees, admission fees, and accommodation rent.
The best thing about these loans is that you do not need to go to lenders. These are government financing loans and are hence available at a very low-interest rate. However, you will have to meet some eligibility criteria.
Further, when you borrow money to finance your education from a private lender, you are supposed to start paying down the debt immediately, but that is not the case with borrowing money from the government to finance your education.
You will be eligible to make payments when you start earning beyond the bare minimum. This repayment plan is known as an income-contingent repayment plan or, in simpler words income-based repayment plan.
Now the question is, what if you need money for your living expenses? For instance, if you are living in a private room, you may face difficulty paying rent. Now is the time when you will start looking for funding from external sources.
How can you Borrow Money for Rent?
Living in a private room can be more expensive than in a hostel. Further, some of your money will go into travelling. This may be very expensive to manage your living cost when you do not have sufficient cash. You may find it hard to pay rent, and this time, you may need to borrow money.
Although lenders are out there to help fund your rent problem, you cannot say those are rent loans. It is considered an emergency, so you can say that you will need a cash loan in 1 hour in Ireland. Though you are a student, you must have the income to prove your eligibility so that you can repay the debt.
Your student loan may count as your income to pay rent, but when you have other debts, you will be left with very little money to cover your educational expenses.
As a result, this traps you in a debt cycle. Therefore, you should avoid just relying on student loans as your income to repay the debt you took on for funding rent. In fact, some lenders would not consider your student debt as your income.
You must have an income source from a part-time job or freelancing. A lender will decide the amount to be lent based on your income. Since this will be a small loan, you will have to pay it back within a short period of time – normally not more than a month. Some lenders may require you to pay down in weekly or bi-weekly instalments.
Do you need a Good Credit Score?
A lender will go through your credit file whether you are seeking an emergency or a wedding loan. They will certainly run a credit check to know about your past financial payment record.
Some lenders advertise that they run a soft credit check. Still, it cannot help them get to know your credit score. Hence, they will make hard inquiries and show up on your credit report.
It means you will lose some credit points. At the time of borrowing money to fund your rent as a student, you should ensure your credit score is healthy. Look at your credit score at least once, so you know there are no errors. If you spot them, get them rectified as soon as possible.
A stellar credit score will help you get money at a lower interest rate. If your credit points are not impressive, you will be turned down or get money at a higher interest rate. If you are using your student loan to repay your debt, it is certainly going to be very expensive as this is considered a cash loans for the unemployed in Ireland.
These work like other emergency loans. The repayment length of these loans is not more than a period of 14 days. It is vital to have sufficient cash to pay off the entire debt.
Is it a good idea to borrow to take out Rent Loans for Students?
Borrowing is an ideal option for emergencies. In other words, one-of-the-cost. For instance, if you go to the university in your car and it is not up and running, you can fund it with a nominal amount of money. Once you have got it fixed, you are to pay back the debt once and for all.
It was a one-off cost because you are not supposed to get your car fixed every month. If you want to borrow money, you should see if it is a one-off or recurring cost. The rent falls in the latter category, which means every month, a portion of your income will go towards your rent.
If you borrow money to pay rent this month, you will have much more burden on your pocket. Now you will not just be paying the amount of rent along with interest to your lender in the form of debt, but you will also have a burden of paying the rent to your landlord that is due next month.
As a result, you will keep borrowing money and eventually fall into a debt trap. This clearly suggests that it does not make sense to borrow to pay rent.
What should you do to manage your Expenses?
You can borrow money if you come across an emergency, provided you can pay back the debt, but if you are struggling to manage your regular expenses, you should follow the following tips:
- Understand your monthly expenses and try to get a part-time job that allows you to cover all those expenses.
- Keep tabs on your expenses, so you do not overspend.
- Try to find accommodation near your college so you can save on travel fares.
- Negotiate the rent with your landlord.
- Instead of private accommodation, you should look to share a room with your friend. This will save half the rent.
Final Word
Taking out rent loans for students is possible, but you will have to look at your repaying capacity. Note that no lender exclusively advertises a loan as a rent loan. It is similar to a cash loan that you take out to fund rent.
You will need a good credit score and an income source. Although a few lenders may treat your rent loans for students as your income, they will still require you to have a side gig or a part-time job. This boosts the chances of getting approval for the loan.
It is recommended you manage your expenses carefully because rent is not a one-off cost. If you borrow money to finance it, you will easily fall into a debt trap. Not to mention how much worse impact you will have on your financial life down the line.
Budget, track your expenses and find ways how you can cut back on your living cost. These techniques can prevent you from financing rent every time.
