When Thilak AS, a Graphic Designer in a leading MNC, relocated to Bangalore from Delhi, he was shocked to know the security deposit amount. He says, “In Delhi, the landlords usually take three months advance deposit, which is fine. However, in Bangalore, my landlord asked for ten months deposit.”
Finding the perfect rental accommodation is a painstaking task. Thus, nobody likes to let it go for the huge security deposit amount. Also, it is not easy to liquidate your savings for paying the deposit. The solution? How about a loan for your rental security deposit? Yes, you heard it right! LoanTap, a company established in 2016, offers loans to customers for paying the rental deposit.
We spoke to Satyam Kumar, Co-founder and CEO, LoanTap to get more insights on this.
It all started with an idea
Satyam along with Vikas Kumar, a technology veteran, founded LoanTap in 2016. When asked how it all began, Satyam says, “it all started with an idea to give faster personal loans to borrowers without fixed EMIs.”
During his banking career, he realised that the traditional financial institutions did not have the agility to bring in product innovation or build in an operational structure, adopt technologies that help disburse loan faster after proper checks.
That’s how LoanTap, an in-house RBI registered NBFC, came into existence. They utilise robust technology to deliver seamless loan experience to customers.
Understanding the benefits
While availing a traditional home loan, one can claim tax deductions. What are the benefits that LoanTap offers to its borrowers?
Well, “our loans are tailor-made and are disbursed within 24-36 hours of online application. We also have customer-friendly terms, like no prepayment charges or foreclosure charges after six months of disbursal. We offer our customers – loans that are easy on their pockets and help them reduce monthly cash outflow by as much as 40%,” explains Satyam.
The story of interest rates
“Interest rates can vary from applicant to applicant, based on one’s credit score. But the difference is in the way repayment is structured.”
In case of rental deposit loan, the borrower pays interest on principal loan amount every month, for the tenure of the lease agreement.
“Principal amount, here, is the security deposit amount, an upfront payment made to the landlord before renting a property. Because the borrower pays only the interest, it reduces his monthly cash outflow up to 40% and provides him much desired financial relief during shifting.”Satyam Kumar, Co-founder and CEO, LoanTap
For the down payment loan, as the name suggests, the EMI starts right from the month of disbursal. This is a sum of interest and principal loan amount divided for the tenure of the loan.
Bangalore and Mumbai leads the show
These days, we see a higher number of millennials taking customised personal loans, ranging from plain vanilla loan to situation-specific loan.
“It’s a new concept, and we are thrilled to see a higher number of customers embracing this financial instrument. Majority of our customers are from Bangalore and Mumbai,” informs Satyam. This is because monthly rentals in these cities are high and security deposits are even higher.