Got no money, need to pay deposit. How?

June 5, 2007 7:41 AM

How can a student with crap credit borrow £1,000 for a flat deposit?

So I've got myself into a bit of a mess. I'm moving out in a month (I have no choice in this), but don't have enough money to pay the new deposit without getting back the deposit from the flat I'm in now.

Effectively, there'll be an overlap of a few weeks to a month or more (who knows with landlords) where I'm £1,000 down, waiting for a cheque to turn up, and paying loadsamoney on living in a hostel or something in the meantime.

I'm not in particularly dire financial straits or anything (haven't been for a while now), but I just can't stretch to sinking £2,000+ into having two deposits with two different landlords at once.

So far, I have tried:
1. The parents. Unfortunately my dad is unemployed and my mum is in the middle of selling her house to pay off her debts. Similar poverty on girlfriend's side of the family.
2. Getting my overdraft extended. The bank told me to get lost thanks to my apparently low credit rating. Pulling my credit report showed up nothing out of the ordinary - I've got few accounts and no strikes against me on anything. I can only assume the problem is that I'm too young/don't apply for enough stuff/aren't "credit active" enough.
3. Signing up with a new bank to get their higher overdraft. Apparently you can't do that without paying back the first one, thanks to "responsible lending practices", even though all this is interest-free student stuff. Great!
4. Getting a loan or another credit card. See above on bad credit rating.

Things that won't work: Getting a cheaper flat, as this is already the cheapest around (moving in costs one month's deposit plus one month's rent plus any fees plus the cost of carting all my stuff about). Trying to get the deposit back faster - landlord is constantly abroad and generally useless. Begging on the street - Manchester seems to have more than its fair share of beggars already. Getting a job - I work part-time, but even going full-time wouldn't raise the money quick enough.

Any other suggestions before I go pay a visit to our friends at Payday Loan Sharkery 4U?

[This is in England, as ever].

posted by reklaw to work & money (16 comments total)

Go to your university welfare officer and ask to borrow from the hardship fund guaranteed against the return of your current deposit. This won't be the first time they'll have had someone in this situation.
posted by biffa at 7:44 AM on June 5, 2007

Oh goodness, I tried that hardship fund thing once before. They wanted to look at all my bank statements going back three years or something and then said that they only have enough money to give people £10 for a book or something. It was unbelievably hopeless.
posted by reklaw at 8:01 AM on June 5, 2007

Have you paid this month's rent? Are you able to skip out a month early, avoid paying this month's rent and save that as the deposit for the flat?

The UK government has a scheme called Crisis Loans which has succeeded for some people I know.

Similarly, some councils (as part of the Housing Benefit scheme) will also offer you money for a deposit, in circumstances where you might otherwise become homeless. Visit your local housing benefit department immediately and explain the situation.
posted by skylar at 8:17 AM on June 5, 2007

Reklaw, one potential option is joining a Credit Union. If you invest X quid in shares in it you can usually borrow (dependent upon the credit union) three times the amount you have invested. So if you stick £350 in it then you could potential withdraw £1050.

They do not take account of credit ratings but will need evidence that you are who you say you are, etc. You would need to pay back a monthly amount and the interest rates are generally higher than those of a bank (but not excessively so) but you will have access to funds in a short space of time.

I realise that this may not be entirely helpful (as some upfront readies will need to be put into the CU account) and it obviously depends on the credit unions in your area but I think this may be a realistic option.

Good luck mate. Been there before at one point in my life and it's not nice.
posted by ClanvidHorse at 8:19 AM on June 5, 2007

skylar, the only person I know who ever succeeded in getting a crisis loan was an ex-junkie who claimed to have set fire to his bed whilst smoking. The only thing that you can normally get in a crisis loan are monies for a bed and bedding.

Having said that if you are really strugglng then pretend to have set fire to your bed to get access to some moolah in this way.

Don't say you have no money for food or shit like that, they have heard it all before and aren't interested.
posted by ClanvidHorse at 8:22 AM on June 5, 2007

As far as your credit cards are concerned, if indeed you have "no strikes", it may be due to the maximum credit limit you have on your cards. Banks do not like to lend money to people who have high maximum limits that are "unused", as you have the potential to max your cards out, and therefore, be unable to pay back your loan. Contact your credit card guys and have the maximum limit on them cut back to the lowest amount you feel you can live with.
posted by BozoBurgerBonanza at 8:25 AM on June 5, 2007

Perhaps others will disagree but in this situation I would really go all-out to find the friend/relative (or two) for whom this kind of money wasn't too much of a big deal, and ask to borrow it for a two months, perhaps going as far as writing them a cheque but asking them not to deposit it until that time. (Shoulda joined the university Conservative association...) It's not a good habit to get into but you won't be a student for ever.
posted by game warden to the events rhino at 8:27 AM on June 5, 2007

skylar: I had thought of that, but my deposit on this flat is significantly more than the monthly rent here, and I wouldn't want to endanger it. Besides, isn't that all a bit dodgy?

ClanvidHorse's credit union thing sounds like a very good idea, though, since I need roughly triple the money I have (obviously it'd all be short term and I could pay it back). Know any good ones to join, in either Manchester or London?

BozoBurgerBonanza: My single credit card has a limit of £350, so I don't think it's that.
posted by reklaw at 8:29 AM on June 5, 2007

It might worth trying for a loan at zopa.com, which would let you pay it off early once you get your deposit back. I'm not sure if you get to pay back without interest or not, and you do need to be earning £10,000 per year to apply.

(Never used them myself, this is not financial advice etc). Good luck!
posted by samj at 8:39 AM on June 5, 2007

No idea about Credit Unions in your area. Usually in fairly poor parts of town but it sounds like a winner if you can get a hold of one nearby.
posted by ClanvidHorse at 8:48 AM on June 5, 2007

I would suggest talking to the landlord of the new place and ask if he/she would be willing to take the deposit in installments rather than a lump sum -- I know people who have done this, particularly with a long-term lease, and it doesn't seem to be that big a deal to many landlords. As long as you demonstrate that you can pay your rent every month, it seems reasonable that they'd be sympathetic to your situation.
posted by camcgee at 8:54 AM on June 5, 2007

In San Francisco, where rents are painful, moving often means $6k or more in cash, I've had easy luck talking a landlord into splitting a deposit over two months. Not sure if this works differently in the UK, but try negotiation.
posted by cior at 8:54 AM on June 5, 2007

It's fairly standard practice to leave your flat without paying the last month's rent. Leave at short notice and send your landlord or their agent a note telling them to keep the deposit. I've done it a couple of times and so have lots of my friends. It's not a particularly "nice" thing to do, but then again landlords' agents have a tendency to discover important repairs that need doing - the cost of which they subtract from your deposit. I've never heard of a landlord or agent taking action against anyone I know who's done this. Of course, it only works if your deposit and your rent are roughly equal amounts.

ClanvidHorse's comment about the crisis loan does not align with what I've heard from people who have successfully got larger amounts. The crucial thing is to try it, and to also try getting money towards a deposit from the Housing Benefit department... because they don't want you ending up homeless, so there are systems in place to help. It's just that they're not advertised very well and they involve a ton of bureaucracy.
posted by skylar at 9:05 AM on June 5, 2007

When I was in a similar situation to you when I was younger, getting a rubbish credit card (£300 limit!) was enough to raise my credit rating sufficiently to get a personal loan for £800 - thus saving my arse. Failing which credit cards themselves may offer a solution - either directly if the agent takes them (which is excellent) or through cash advance (avoid except in dire emergency).

Your only other alternatives are essentially cash converters or similar - and that depends on having enough stuff to guarantee the loan...

Best of luck!
posted by prentiz at 9:36 AM on June 5, 2007

It's worth checking if your Local Council has some sort of loans scheme for deposits. Policies may have changed since the new deposit protection scheme was introduced in April.

Also do check that your new landlord is going to protect your deposit in an approved scheme (now that this system is in place, having to skip out of the last month's rent to avoid the hassle of reclaiming deposits should become less common by the way).

Witholding your final month's rent will technically put you in breach of contract with your current landlord. While he may be unlikely to pursue court action, it may mean you won't get a reference which may be a problem in future.

Don't apply for a crisis loan unless you have an actual crisis, and just requiring a new deposit wouldn't generally qualify. Possibly you could try for a budgeting loan instead - like a crisis loan it's a discretionary loan drawn from the social fund. However, if you're a full-time student this is unlikely, as only people on means-tested benefits will generally qualify. However, these discretionary decisions are difficult to predict.

I think that most Credit Unions will not give you credit until you've demonstrated a good savings record with them.

By the way, if you have had dodgy dealings in the past which don't show up on your credit check, try checking what all three reference agencies have on you, not just one, as they don't necessarily share all info (Experian, Equifax, Callcredit).
posted by wilko at 10:57 AM on June 5, 2007

I'm probably missing something here, but £1000 pcm would get you a pretty swanky pad in London, let alone Manchester.
posted by iamcrispy at 1:44 PM on June 5, 2007