A tenant loan is an unsecured personal loan. It's called unsecured because the tenant loan applicant does not need to provide any collateral or security. These loans are appropriate for people who lack sizable assets, such as a house. People who have bad credit usually fall into this category.
Tenant Loan Requirements
Tenant loans are quite common in the UK, as there are increasingly large numbers of people who rent their homes. However, not all non-homeowners can qualify for a tenant loan. An additional aspect of tenant loan basics is that you need to prove you have a stable source of regular income so that you can afford to repay your tenant loan.
Advantages of Tenant Loans
One common occurrence when it comes to tenant loans is that many lenders refuse to offer them to people who lack assets to put up as collateral because these borrowers are considered high-risk. Luckily, because of the demand for unsecured tenant loans, more and more lenders are becoming more lenient. Another plus is that, due to the high demand for tenant loans, interest rates for this type of loan have decreased significantly.
Because of these changes in the tenant loan market, people who have less income may be able to afford tenant loans nowadays. You may even be able to negotiate with tenant loan lenders for longer repayment periods. Tenant loans do not cost as much as other forms of unsecured personal loans such as credit cards or payday loans.
Tenant loans may also be given to people with bad credit to help them rebuild their credit rating. These borrowers with bad credit may have to deal with higher interest rates due to the increased risk assumed by the lender.
Tenant Loan Finders
An additional service that has grown out of the tenant loan industry is the tenant loan finder business. These tenant loan specialists do not offer tenant loans themselves; rather, they will help you secure a tenant loan whose interest rates and terms match your particular circumstances. These specialists generally help borrowers who have been turned down by traditional lenders, such as banks. In some cases, a fee will be charged for this service, but it's usually worth the added expense when you think about how much time you are saving by not having to research all the lenders on your own. In the end, you will simply have to read the data that the tenant loan finder digs up for you.
Paying for Your Tenant Loan
Since a tenant loan is an unsecured personal loan, the lender cannot take possession of your property because you did not put up any assets as security. However, if you fail to repay your tenant loan, the tenant loan provider has the right to initiate legal action against you. To prevent this from happening, you should compute how much you can afford to pay monthly, inform your lender at the start of the application process, and stick to your repayment schedule.
In the UK, the repayment of a tenant loan lasts from 1 to 25 years. Like other forms of unsecured personal loans, you have to be wary about overborrowing. Though the interest rates are higher for tenant loans than other types of loans, the borrower has the consolation of knowing his only risk is the danger of non-payment of the loan.
By being diligent about repaying your tenant loan, you will build your personal credit history and your credit score. If you are able to do so, you will be qualified for different types of loans, perhaps with lower interest rates, in the future.