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Can you pay your security deposit in payments at move-in?
From renting a U-haul to paying your security deposit, the upfront costs of moving can really add up. The good news is that many landlords and property management companies are looking for ways to make move-in a little more affordable. A new option–security deposit installments—is very similar to the Buy Now Pay Later (BNPL) services you see offered by many online retailers. Here’s what you need to know about security deposit payment plans.
Types of security deposit payment plans
If your landlord decides to offer security deposit payments as an option, they’ll typically work with a third party (ahem, like Roost) to manage the payments. How the security deposit installment plan is structured, and how much it costs may depend somewhat on where you live. Generally speaking, however, there tend to be three types of security deposit payment plans. Your plan could look like any of the following:
- Four payments over six weeks. This is a classic BNPL format. You make the first payment at move-in and the additional payments every two weeks.
- Three payments over three months. You’ll typically pay the first security deposit payment at move-in and each additional payment monthly.
- Six payments over six months. This is the longest and least common security deposit installment plan, but it is offered (and required) in some locations. For example, in King County, Washington. With this type of plan, you pay your first payment at move in and the five remaining payments are due monthly.
Pros to making security deposits in payments
- Less money upfront. By spreading out your security deposit over a longer period of time, you don’t have to worry about putting a full deposit down when you haven’t yet received your refund from your previous landlord.
- Cover other moving costs. When you’re moving, you typically have a variety of additional expenses. If you have some savings set aside, you can use that money to cover moving costs and leverage a payment plan to better align your security deposit payments with your upcoming paychecks.
- Less interest and fees. The costs of a security deposit payment plan are typically a lot less than what you would spend on interest and fees if you have to put all your upfront moving costs on a credit card.
- Temporary costs. Unlike security deposit alternative products (which typically require ongoing, non-refundable fees in lieu of security deposit), the fee you pay for installment plans is temporary and goes away as soon as you’ve fulfilled your security deposit requirement.
Cons to making security deposits in payments
- You still have to come up with the deposit. While you can pay your security deposit over time, you ultimately still need to pay it.
- There may be a fee. Some landlords absorb the cost of security deposit payment plans for their residents; others do not. The good news is that the fees are typically pretty fair and last only as long as you are using the service.
- Eviction is on the table. If you don’t complete your security deposit payments, your landlord can evict you. Paying the security deposit is part of the requirements for renting an apartment; you can’t avoid that.
Why more landlords are offering security deposit payments
Offering security deposit installment plans is a growing trend. Why? The majority of renters use modern payment methods, and with companies like Apple and Paypal now offering Buy Now Pay Later (BNPL) services, giving people the option of paying for things in manageable chunks is becoming way more mainstream.
Additionally, a growing number of city and state governments are working to increase affordability by lowering move-in costs for renters. Some places have even implemented new tenant-landlord laws with varying requirements depending on the length of the lease and amount of deposit. For example, in Portland, Ore., anyone paying a conditional deposit must be allowed to pay the additional amount in three installments over three months.
Security deposit payments vs security deposit alternatives
Over the past five years or so, a number of security deposit alternative products have become available. While the types and costs vary, these products typically charge renters a non-refundable monthly fee instead of a security deposit—but you may still be on the line for damage charges at move-out.
|Ongoing, non-refundable fees||Security deposit required||Payment duration||Still responsible for damage charges|
|Security deposit payment plans||No||Yes||2-6 months (depending on plan)||Yes|
|Security deposit alternatives||Yes||No||Lifetime of lease||Yes|
If you’re looking to find more affordable ways to move-in, make sure you calculate the ongoing costs of any service—and that you understand what charges you might still be responsible for at move-out.
Frequently asked questions for deposit payments
Is there a fee or extra charge on the security deposit balance owed?
It might depend on the provider, but with Roost, there’s only a small fee for each installment payment. There are no interest charges on the outstanding balance.
What happens if I miss a payment?
If you think you might miss a payment—or you already did—you’ll need to contact your property manager or landlord right away. Ultimately, they make the call on whether you have violated your lease agreement by not paying the security deposit payment. They may assess a late fee or, if worse comes to worst, proceed with a notice to evict.
Will security deposit payment plans improve my credit score?
If you make your repayments on time and the provider reports those payments to credit bureaus, it may have a positive impact on your credit history. (Alternatively, it’s possible that missed or late payments could negatively impact your credit history.)
Can I sign up for a security deposit payment plan directly?
No. Your property decides which security deposit payment plan provider to use. You’ll want to make sure to sign up with that provider so that your landlord notes that you have been making your payments.
How do I make a security deposit payment?
To enroll in a security deposit payment plan, you’ll typically link up your checking account. This ensures that the provider can withdraw your payment electronically on the required date to ensure that you are not in violation of your lease agreement.
Do I get my security deposit payments back when I move out?
Assuming there are no damages, yes! Unlike security deposit alternatives, you’re not replacing your deposit—you’re just paying it gradually over a short period of time. That means you can still get a refund back. Why is this important? It’s a lot of money! And it’s money you may need for to pay a deposit on your next apartment or to put towards a future home down payment. (Need some tips? Check out our security deposit guide for help.)
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