When applying for a rental property, you may be informed that you must use a guarantor company.
For those hearing this for the first time, it may be a little difficult to understand what company this company is and why it costs money.
Role of rent guarantee company
A rent guarantee company is a company that reimburses the landlord for rent if the tenant is unable to pay the rent.
However, the paid rent will not be exempted. The guarantee company will bill the tenant at a later date.
In other words, for landlords, guarantor companies reduce the risk of rent arrears, and for tenants, they are often one of the conditions necessary to sign a contract.
Is it different from a joint guarantor?
In the past, it was common to sign a contract with a joint guarantor, such as a relative.
Currently, an increasing number of properties are requiring the use of a guarantor company rather than a joint guarantor. Even if you use a guarantee company, you may be required to provide emergency contact information and a joint guarantor.
Conditions vary depending on the property, so it's best to check before applying whether you only need a guarantee company or whether you need a joint guarantor.
How much does the warranty cost?
Guarantee fees vary depending on the guarantee company and property, but the initial guarantee fee may range from 30% to 100% of the monthly rent, etc.
Additionally, some contracts require annual renewal guarantee fees or monthly guarantee fees.
If you only look at the initial cost, it is easy to overlook the guarantee company's renewal fee and monthly fee, so it is important to check the total amount.
Guarantee companies also carry out inspections.
If you use a guarantee company, there will be an examination by the guarantee company.
You may be asked to confirm your annual income, place of employment, type of employment, past payment status, and consistency of application details. Screening standards differ depending on the company, so some guarantee companies are easy for the same person to pass and others are difficult to pass.
If you are unsure, sharing your situation with the person in charge in advance will make it easier for you to consider which properties to choose and how to proceed.
summary
A rent guarantee company is a company that guarantees the payment of rent under a rental contract.
Costs, renewal fees, screening, and presence or absence of a joint guarantor vary by property. By checking the terms and conditions before applying, you can reduce anxiety and unexpected expenses when signing a contract.