At a Glance

Security loans are a unique personal loan type structured specifically to assist with the security deposit required by your landlord. The borrowing of the loan is for the sole purpose of meeting your deposit, meaning the loan amount is typically smaller than a standard personal loan. With a strong credit history, any borrower can increase their chances of getting approved for this type of loan.

In this article, you’ll learn:

What is a security deposit loan?

As outlined, a security deposit loan is a specialty personal loan that provides a borrower with the exact sum of money needed for their security deposit. Consider how expensive security deposits can be, without a loan for security deposit expenses you may be unable to move into your new residence. These loans can be offered by banks, credit unions, online lenders, and third-party lenders alike.

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Credit score required for a security deposit loan

A good to excellent credit score is likely required for a security deposit loan (690+). However, there are some online lenders and credit unions that may provide security deposit loans for borrowers with lower credit, even as low as 599 or below. However, borrowers with lower credit may face higher interest rates, and repayment terms may not be as good as for borrowers with good credit.

Pros and cons of security deposit loans

Using a loan to pay your security deposit is a big decision, which is why all the pluses and minuses should be considered before contacting a lender:


  • Quick access to security deposit funds in full.
  • Smaller sum of money borrowed than with a standard loan.
  • Smaller interest rate than with a standard loan.
  • Potentially no collateral required.


  • Interest on the loan means you are paying back more than just the security deposit in the long run.
  • Needing to take out a loan to make a security deposit payment could be a strong sign that you can’t afford monthly rent payments.

Can you use a personal loan to cover a security deposit?

You can use a personal loan to cover a security deposit, but it’s important to know the types of loans available to you. With rental security deposit loans, there are two main types to consider taking on as a borrower:

1. Secured deposit loan

Secured rental security deposit loans require some form of collateral when taking on the sum of the loan. If you cannot repay the loan, the lender may have the legal obligation to take ownership of whatever the borrower pledged as collateral. Secured loans are typically best for those unable to qualify for an unsecured loan due to poorer finances or credit history.

2. Unsecured deposit loan

The second type of security deposit loan is an unsecured loan that doesn’t require any collateral. With this type of loan, a borrower is given the sum of money in good faith with no added security, but they are still completely responsible for all payments in full.

Related: Secured vs Unsecured Personal Loan

Should you take out a personal loan for a security deposit?

If you’re renting or leasing, you’ll likely be required to pay a security deposit. A personal loan can be a way to cover it if you don’t have the cash on hand; however, it may not be the best financial option depending on your circumstances.

If you need to take out a personal loan to cover your deposit, this may indicate you’re not quite ready to move into your own place, or that the property is too expensive for your current financial situation and budget. It may be better to save for a few months until you have the cash to pay the deposit, or find a less expensive apartment that would have a smaller deposit.

However, if you’re in a situation where you can’t wait to save or you don’t have many choices for apartments, a personal loan can help ensure you have the funds you need to secure your new home.

Where can you get a security deposit loan?

There are a few main sources to get a loan for security deposit. Each source comes with its own average interest rate and loan terms, so be sure to consider each option to determine which may be best for you when borrowing:

1. Online lenders

As one of the newest forms of lending, online lending has grown rapidly in popularity. Small personal loans are typically offered through online lenders, with sums as small as $500, making online lending a perfect choice for borrowing your security deposit loan. Be aware that online lenders may charge a higher interest rate than expected depending on factors such as income history and credit score.

2. Peer-to-peer lenders

Peer-to-peer lending is a great choice for smaller loan amounts such as a rent deposit loan. Peer-to-peer lending (P2P) essentially cuts out the middleman and allows a person to borrow money directly from another individual without a financial institution in between. Typically, P2P lending occurs using an online verifiable platform.

3. Banks and credit unions

Finally, banks and credit unions are your third option when seeking out a rent deposit loan. These traditional lenders offer competitive loan rates and very fair loan terms that can rival online lenders. Additionally, for bank lending, if you have a history with the bank you are considering borrowing from, you may be offered benefits or better terms. Be aware that borrowing from a credit union may require you to become a member.

How to avoid taking out a personal loan for a security deposit?

Instead of a personal loan, a few things you can consider include:

  • Using your tax refund if you know you’ll get money back at the end of the tax year.
  • Borrow from a friend or family member so that you have the funds and can avoid interest on a loan.
  • Open a high-yield savings account and set money aside over the next few months. The higher interest earnings will help you save more faster.
  • Start a side hustle or work extra hours/shifts.
  • Find a cheaper apartment or one with a smaller deposit required.


No, an advance payment on rent is distinct from a security deposit and serves a different purpose. While an advance on rent allows you to pay months of your rent ahead of time, a security deposit does not go towards your rent. It’s best to think of a security deposit as a sum of money set aside by the landlord as a form of collateral in case a tenant violates their lease.

A security deposit loan will impact your credit if you fail to make the necessary payments on the loan in time. This can quickly hurt your credit score and leave a lasting stain on your credit history, so making complete payments in accordance with your financial obligation should be a top priority.

Most landlords have a blanket amount that the request from tenants for a security deposit, rather than picking and choosing what they charge per tenant. Due to this, it is unlikely that your credit score will influence the security deposit amount. However, your credit score will certainly impact the decision of whether you are approved for your apartment or home.

No, a rent deposit loan is typically used to pay an advance on rent whereas a security deposit is usually used to pay a security deposit.

Yes, you can use a security loan for apartment deposits. When you rent and move into an apartment or home, the landlord will typically require a security deposit. A security deposit loan is a specialty personal loan that provides a borrower with the exact sum of money needed for their apartment deposit.