Reasons To Pay Rent On Time
It’s easy to get complacent if you’ve been in a rental for a long time, or if you’re in the middle of a lease and everything has been going well.
You take great care of the place, keep the noise down and are a model tenant. Then one time your rent is a day or two late while you wait to be paid. No one says anything, so it’s no big deal, right?
The consequences of a few late rental payments can actually be far reaching. First of all, just about everything we do that relates to our financial situation is heavily monitored these days.
So, if you are looking to get a loan to buy a property at some stage, your late rental repayments may count against you in the approval process. We all have credit scores and even minor indiscretions could be the difference between being able to buy a property in the future and being rejected. These marks against your credit score can set you back years.
If you have to move on from your current place, you might find that late or missed rent payments make it hard to score another rental. The market may have become tighter and more competitive during your previous lease and suddenly you find yourself up against a stack of other would-be tenants when you rock up at open inspections. Put yourself in the agent or landlord’s shoes. After collecting the rental histories, references and rental ledgers (which include details of every rental payment you have made)… who would you lease your property to, one of the applicants with a perfect record, or the financially flaky tenant with a history of late payments?
Banks, businesses, agents and investors are all in the big data business these days… they minimise their own financial risk by using as much data as possible to build profiles of financially reliable tenants. Part of this data is a tenant database known as TICA.
TICA has more than 7 million tenancy default records and is checked by real estate agents to make sure you don’t owe money to any other agencies. On top of this, it also shows what other agencies have searched for you in the past. So, even if you haven’t defaulted, multiple searches by different agencies will likely ring alarm bells for an agent considering a current rental application.
If your rent is in arrears by a certain number of days (check in your own state or territory), you can be served a termination of tenancy notice. This gives you another set period to get your rent up to date or enter into a payment agreement with your landlord. If you fail to meet that deadline, you may face eviction.
If your landlord wants you out of the property for a different reason…say they want to move family in, or have a tenant ready to pay more rent than you, being late may give them a way out of honouring your lease.
Some tenants make late payments by accident because they are confused about when rent is due. Say they moved in on a Friday, they may think their weekly rent is due on a Friday. But the seven days actually ends on a Thursday, so that’s when rent is due. If you’re one day late your rent is in arrears and that can go on your rental record.
Paying your rent a week early can give you peace of mind and also protect you against hurdles that are out of your control. For example, if you are paying by electronic transfer, there might be a system issue with online banking, or a delay in the money going through and suddenly you go from a day early to a day late. Bringing everything forward a week, or even further means this won’t happen. Plus, if you get into the habit of paying early, that can make a positive impression with future landlords or lenders.