Rent Arrears Loan

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Last updated on May 4th, 2022 at 03:21 pm by Bill Tsouvalas

Rent Arrears Loan

Falling behind on rent can leave you in a tricky situation. You don’t want it to get out of hand, but is there a way to pay your landlord now and then manageably repay that debt over time? Find out about rent arrears loans and whether they’re the right solution for you.

What is a rent arrears loan?

A rent arrears loan is money you borrow to clear your rent debt. They provide you with rapid access to the required funds and allow you to immediately pay off the rent you owe. You can then repay that debt in a more manageable way over a number of months. If your rent is in arrears and you don’t currently have the funds to pay it, one of the quickest and easiest options available is an instant cash loan. This is a small loan available from online lenders that provides between $300 and $5,000 of quick funding for urgent expenses.

“Rent arrears” effectively means your rent is late. Arrears is a technical, legal term for something being overdue or after the fact. Workers are often paid in arrears, meaning they’re paid after they’ve completed the work (or at the end of the pay period). When it comes to debts such as rent, it’s not such a good thing.

How can I get a rent arrears loan?

The best place to start applying for an instant cash loan to clear a rent arrears is by jumping online. Instant cash loans are available from a variety of online Australian lenders, and the process of applying and getting approved is fast and simple. For example, if you apply for an instant cash loan on the Savvy website, our five-minute online application can give you 24/7 access to some of Australia’s top online lenders, with 60-second pre-approval for a rent arrears loan up to $5,000.   

As part of that application, you can also choose the period over which you’ll repay your loan. For amounts up to $2,000, online lenders might have between three and 12 months to repay the money (depending on the lender). Amounts above $2,000 up to $5,000 allow slightly longer terms of up to 24 months. This allows you to spread a large overdue rent bill out over a longer time, paying it off progressively.

Savvy’s network of lenders allows you to choose your loan term. This means that, as a borrower, you get the choice of lower repayments over a longer time or paying more each time to clear the debt quickly, meaning you pay less in fees overall.

Frequently asked questions about rent arrears loans

Will my rent being in arrears affect my credit rating?

If your rent is in arrears long enough, yes – like any unpaid debt or bill, it can lower your credit rating. It’s a good idea to act sooner rather than later with rent in arrears, as initially the consequences are less serious. Just because they’re less serious doesn’t mean the resulting action will be insignificant, however. Rent in arrears will eventually be reported by your landlord to the courts as part of eviction proceedings.

Does my rent being in arrears make it harder to get a loan?

It can – if your rent has been owing for a while, your landlord can report it, which will show up on your credit report and indicate to a potential lender that there’s a problem. Potentially, this makes it harder to get a rent arrears loan to fix the problem. Fortunately, though, online lenders are generally quite understanding about credit rating when it comes to small cash loans – especially if you’re getting the loan specifically to settle that debt.

How do I check my credit rating before applying for a rent arrears loan?

You’re entitled to a free copy of your credit report every three months. Various credit agencies can provide this – notably Equifax, Experian, and illion. Your report will have details not just of your credit rating, but of things like your credit limits and outstanding debts. It is possible that a credit report may have errors, in which case you’re entitled to report them and have them corrected.

Are there government assistance options if I'm struggling with my rent in arrears?

Yes – there are some options for loans and other government assistance if you’re in a crisis and struggling to pay rent. The Australian Government can offer small interest-free loans to low-income earners who meet the criteria. Centrelink customers might also be eligible for advances on their payments, or rent assistance. The application process can take a little time, though.

How long does it take to apply for a rent arrears loan?

A rent arrears loan through an online lender is a very quick process. Savvy’s online loan application takes about five minutes to complete. Once you’ve submitted your initial application, you can generally expect the loan to be finalised and the money transferred on the same business day.

What will I need to be able to apply for a rent arrears loan?

To get a rent arrears loan finalised, you’ll need some supporting documents. You’ll need 100 points of ID (a passport or birth certificate is worth 70, while a driver’s licence or student ID card are each worth 40). You’ll also need bank statements and proof of income – these are normally payslips, although in some cases you might be giving them some Centrelink details, in which case they can access information through the myGov network.

Top tips for avoiding getting into rent arrears

Prioritise rent

Rent should be one of your first priorities – having a roof over your head isn’t a secondary consideration. Don’t make plans that involve paying rent late, as you’re bound to find yourself in crisis and in need of a laon to pay your rent.

Work to a budget

It’s always helpful to sit down and draw up a list (or a spreadsheet) of your expenses, income and how often each of them gets paid. Be generous with estimates. Work out what you’ll need to cover your costs across the year and make sure you’re setting aside enough of each pay check to cover that cost.

Set aside funds

It’s often a great idea to have a second bank account set up – perhaps a purely online one that you don’t have a debit card for – where your rent and other expenses are transferred a day or two after your pay hits your account. That way you know your rent is safely set aside, and you can’t accidentally spend it by losing track of everyday expenses. This is a little like having a rent-tin, except it’s easier to electronically transfer the money to your landlord.

Keep careful track of due dates

Have a calendar – whether it’s a big paper one on the wall or an online Google calendar that sends reminders to your phone – and have the due dates for bills and rent in it. Even if your rent is paid automatically (which can be a good idea), it helps you keep track of when that’s happening and check in that the finances are there and ready to go.

Talk to your landlord

If you’re getting into trouble with your rent, it’s always a good idea to talk to your landlord or land agent. It might feel like an uncomfortable conversation to have, but they can’t help if they don’t know the situation. People generally respond better to a debt not getting paid if they know what’s going on and understand the reasons for it.

Consider other accommodation

If you’re regularly finding yourself in rent arrears, it’s worth considering if you can move to more affordable accommodation, such as a smaller house or a more affordable location. While it can cost money to move, you’re generally a lot better off getting a short-term loan to help you lower your expenses long-term (by moving) than having to borrow money just to make ends meet.