Before we get into shopping for a tenant loan, here's a quick definition of what a tenant loan is: a tenant loan is a type of loan offered to borrowers that do not have anything of significant value to offer as collateral on the loan. Due to the fact that there is no collateral involved, these borrowers often must deal with higher interest rates because of the higher amount of risk being assumed by their lenders. With that bit of background, here are some tips to help you expediently and cost-effectively shop for a tenant loan.
Things to Keep in Mind About Tenant Loan Shopping
- When you're shopping for a tenant loan, know that you'll need to do a lot of research and hunting in order to find the lender that will give you the best tenant loan rate. Interest rates differ significantly from lender to lender, so be sure to do your homework, and find out who is offering the best rates.
- A person who needs help finding the right tenant loan lender can employ the services of a tenant loan finder. This type of person or company earns its keep by helping you get tenant loans that have the most competitive rates in the industry. This will help shorten the tenant loan shopping process considerably.
- Though a tenant loan applicant will not need to submit any proof of security or collateral to his preferred lender, one factor influencing the interest rates offered is his credit history. A person who lacks a decent credit history is at a disadvantage because lenders look for your borrowing and repayment habits as represented by your credit history. Better terms are provided to people with good credit history.
- Borrowers need to be able to prove that they receive a stable income (such as being a full-time employee).
- A borrower's bank account should be able to accommodate a direct debt card facility.
- You should have evidence that you have been living at your current residence for quite some time, such as having a landline contact number. This is required my many lenders so that they can see that you've got steady habits and you're not prone to jumping from one place to another.
Other Things to Keep in Mind
- Most of the time, you will have to accept higher rates of interest on your repayments because a tenant loan is an unsecured form of personal loan. This means the lender is accepting a higher level of risk of nonpayment than a secured loan borrower would.
- The borrower does not have to worry about losing his/her property because their property is not put up as collateral (and most tenant loan borrowers lack sizable assets to put up as collateral anyway). However, a borrower who does not fulfill his repayment obligations may have to answer to legal action initiated by the lender. This is why searching for low interest rates is quite crucial.
- There is less paperwork and a shorter waiting period involved in tenant loans.
- It is possible to go online to apply for your tenant loan, since many lenders operate from websites now.
- The maximum you can usually borrow on an unsecured basis is £50,000. One factor that will dictate the amount you can borrow is your monthly income. Usually, the loan amount should be equivalent to 70-75 per cent of what you earn per year.
- The interest rate you have to shoulder per month may be influenced by the repayment period granted to you or that you requested from your lender. Repayment periods may last from one year to 25 years maximum.
- You may be able to improve your credit history by taking out a tenant loan. In order to improve your credit score, you need to make payments on your tenant loan strictly according to schedule, so you can prove to the lender that you are a low risk borrower.
- A person who succeeds at repaying his/her whole tenant loan amount may eventually qualify for other types and amounts of loans with lower interest rates.
To sum up, if you've got little to no personal property of high value, such as a car or a house, you may qualify for a tenant loan. The downside to a tenant loan is that you will most likely be forced to endure paying higher interest due to the fact that you're a high-risk borrower in the eyes of your lender.