Loan to help Seattle-area tenants cover move-in costs raises repayment questions
SEATTLE – A place to call home can get expensive for people who rent in Seattle and surrounding cities. Most tenants are required by many landlords to pay the first month’s rent, the last month’s rent, and a security deposit before receiving the keys to their apartment. The expense can be a financial barrier for people living paycheck to paycheck.
A credit union comes forward to try to help tenants find the money they need to move in without breaking the bank.
Tonita Webb, executive vice president and chief operating officer of the company, said it was a way to help people cope with rising housing costs in the area.
“It’s a real community problem, isn’t it? Rising rents, rising costs, more and more homeless people on the streets because they just can’t afford to live. And it’s not that they can’t pay the rent, it’s the other things that come with it, ”Webb said. “Our vision is to be Seattle’s partner for growth and prosperity. So in order for us to do that, we need to bring in products that help our community thrive. “
RENTCafé.com is a national company that tracks multi-family developments and rental cost trends. The company’s online data collection for October 2019 shows that Seattle renters are paying an average of $ 2,122 for 696 square feet. In Tacoma, the average rent for October 2019 was $ 1,323 for 834 square feet. In Everett, the average rent for October 2019 was $ 1,462 for 856 square feet.
“A lot of people — they can afford the monthly rent. However, you have to find the first, the last, the security deposit and if you have a pet there is a pet deposit. And sometimes they need help, ”said Webb. “Finding accommodation is getting more and more expensive, even if you have a well-paying job.
Webb said the loan ranges from $ 2,000 to $ 10,000 and people can apply even if they have poor credit. She said she thought it was a smarter alternative than paying to move in with a credit card.
John Christianson, owner of Highland Private Wealth Management, said the loan might not be the best option for people.
“It’s going to be an expensive way to get money to get into a place,” Christianson said. “Either way, you’re not far from the interest rate on credit cards. So these are very short term solutions to a longer term problem.
Christianson said it’s not just the loan interest that people should be considering.
“The key question will be ‘Can I? Can I afford it? Can I budget for this? Because I still have to pay the rent to the landlord. I still have to pay this on time, and I have paid off this loan. So there are a few things that need to fit within your budget that may or may not work for you, ”Christianson said.
Instead of paying another bill, Christianson advised people to weigh all of their options, including travel from a cheaper community.
“Clearly look at your budget and say I live so close to the financial threshold that there is nothing for me to make some adjustments?” Maybe I can’t afford to live here, maybe I have to take a job in a different kind of community that allows me to really build the kind of financial life I want, ”Christianson said.
Webb said the company understands that the loan may not be the best option for everyone. She explained that this is why SCU offers financial advice to clients before making a decision.
“We love to talk about it to make sure it’s the product for you, it’s something you need. Because we’re not here to put someone on a product that’s going to create bad debt, are we? Some debt is good because you build, you build your credit score, you learn to navigate finances. So we have this full conversation, ”said Webb.
Christianson said not everyone has the option of putting money into a savings account. He understands that the loan may be the only option for obtaining housing for some people. However, he encourages people to start considering setting aside emergency funds.
“Prepare to have cash on hand for these kinds of unforeseen things that arise in all of our lives. We have to have the money available for this stuff, ”Christianson said.
Webb said SCU expects customers to be able to repay the loan in about a year.