The housing market in Ontario has seen a considerable rise in prices, prompting financial startup Nesturo to provide loans for renters who have difficulty affording rental deposit expenses. Established in late July, Nesturo aims to support students lacking a solid credit background, individuals moving to expensive cities due to medical reasons, or those in unsuitable housing situations who need to relocate without adequate savings for a deposit.
To ease the burden of high upfront costs, Nesturo offers flexible payment plans, allowing renters to pay their deposits in monthly installments. This innovative approach emphasizes inclusivity and equal housing opportunities for those who might otherwise be unable to secure a suitable rental property due to financial constraints.
Executive insight
Angela O’Leary, executive chairman of Nesturo, noted that their product enables people to move without exhausting their savings. She explained that the financial flexibility offered by Nesturo’s services ensures a more seamless and cost-effective relocation experience for customers.
O’Leary also highlighted the company’s focus on providing personalized solutions, tailored to meet each client’s unique budget and moving requirements.
Rising rental costs
In July, the average cost of a two-bedroom apartment in Toronto reached $3,370, a notable increase from $2,709 in 2020. This upward trend in rental rates highlights the growing demand for housing in the city amid easing pandemic restrictions.
Experts suggest that this increase may result from renters returning to Toronto, seeking rental properties after spending the earlier months of the pandemic in suburban or rural areas.
Repayment options and financial assistance
Nesturo offers repayment options of either six or nine months, with payments starting 30 to 45 days after the disbursement of funds. This flexibility allows borrowers to choose a repayment plan that best suits their financial circumstances and ensures timely repayment. Additionally, Nesturo provides financial assistance and guidance throughout the loan term, ensuring that borrowers are well-informed and confident in their ability to repay the loan.
Interest and creditworthiness
For those with stable employment, income, favorable credit scores, and no history of late rent payments, interest rates start at a modest 6.99%. This makes it an attractive option for financially responsible individuals looking to secure a loan for various purposes, such as home renovations or debt consolidation.
Furthermore, these competitive interest rates allow borrowers to manage their loans quickly and confidently, knowing their creditworthiness has earned them a favorable deal.
Risks of high-interest rates
However, loans for individuals with poor credit scores can have interest rates as steep as 29.99%. This means that borrowers with poor credit history may pay significantly more in interest over the loan life than those with better credit scores. Individuals must be aware of these high-interest rates and carefully assess whether they can afford the monthly payments before securing a loan with such terms.
Financial advisors’ caution
Financial advisors caution that renters who can’t afford the initial rental costs and need a loan may encounter even more significant challenges repaying loans on top of expensive monthly rent payments. Furthermore, they warn that piling on debt can significantly affect an individual’s financial stability, potentially leading to long-term consequences such as lower credit scores and difficulty securing future loans.
It is advised that potential renters carefully consider their finances, explore alternative housing options, and seek professional guidance if they are unsure of their ability to afford and maintain a rental property without falling into further debt.
Potential challenges with startup loans
Nesturo might be a feasible option for someone who must quickly leave an unfavorable rental situation. Still, financial professionals express concern about people taking on this kind of debt, particularly if they have low income or credit scores and face high-interest rates.
For such individuals, the repayment burden could lead to further financial difficulties in the long run. It is crucial for potential borrowers to carefully weigh their options and seek professional advice before committing to a loan product like Nesturo.
Caution with new financial startups
Borrowers should also be careful with new financial startups, as their policies on late payments and other matters might be unclear. In addition, it is crucial for borrowers to thoroughly research and understand the terms and conditions of these startups before engaging in any transactions.
By doing so, they can avoid potential pitfalls and ensure a smoother borrowing experience when dealing with unconventional lending sources.
Alternative assistance programs
Financial planners suggest that anyone considering borrowing for rent deposits should contact their local municipality to learn about available financial assistance programs like rent banks, which provide zero-interest loans or grants for initial rent payments to those with low incomes.
In some cases, these programs can help potential renters secure a home without resorting to high-interest loans or credit cards. Moreover, it’s crucial to consider all available options for assistance and weigh the possible long-term consequences of borrowing money for rent deposits, as it could impact one’s financial stability and ability to maintain housing in the future.
Budgeting and planning
Furthermore, examining their monthly budget for potential expense reductions could be the most effective way to avoid debt while relocating.
Individuals can also consider selling or donating non-essential items before the move to reduce moving costs and earn some extra cash. By implementing these strategies and carefully planning expenses, one can have a smoother relocation experience without accumulating unnecessary debt.
FAQ – Nesturo Rental Deposit Loans
What is Nesturo?
Nesturo is a financial startup that provides loans for renters who have difficulty affording rental deposit expenses. They offer flexible payment plans, allowing renters to pay their deposits monthly. This helps create equal housing opportunities for those facing financial constraints when securing a suitable rental property.
What is the repayment period for Nesturo loans?
Nesturo offers repayment options of either six or nine months, with payments starting 30 to 45 days after the disbursement of funds. This flexibility allows borrowers to choose a repayment plan that best suits their financial circumstances and ensures timely repayment.
What interest rates does Nesturo offer?
Interest rates for Nesturo loans start at 6.99% for those with stable employment, income, favorable credit scores, and no history of late rent payments. However, interest rates can be as high as 29.99% for individuals with poor credit scores, meaning they may end up paying significantly more in interest over the life of the loan.
What risks do financial advisors see in using loans for rental deposits?
Financial advisors caution that renters who can’t afford the initial rental costs and need a loan may face even greater challenges repaying loans on top of expensive monthly rent payments. This can significantly affect an individual’s financial stability, potentially leading to long-term consequences such as lower credit scores and difficulty securing future loans.
What are some alternative assistance programs?
Financial planners suggest contacting local municipalities to learn about available financial assistance programs like rent banks, which provide zero-interest loans or grants for initial rent payments to low-income people. These programs can help potential renters secure a home without resorting to high-interest loans or credit cards.
What advice do financial professionals offer for budgeting and planning when relocating?
Examining one’s monthly budget for potential expense reductions and selling or donating non-essential items before the move can help avoid debt while relocating. By implementing these strategies and carefully planning expenses, individuals can have a smoother relocation experience without accumulating unnecessary debt.
First Reported on: theglobeandmail.com
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