If you’re thinking of buying a new car then you’re probably also thinking of how best to finance the deal, right? A new set of wheels doesn’t come cheap and in some cases, neither does the finance so it’s worth taking the time to resolve how you intend to raise the money before signing the papers and committing yourself to an expensive finance agreement.

Unsecured loans for tenants are applied for in their thousands every month and one of the most common reasons for people wanting to borrow the money is for a new car. It’s likely then that most lenders in this market have a slick process to handle this type of loan enquiry which means that it’s comparatively pain free from your point of view.

Homeowners typically have a wider range of financial products that they can use to borrow money through. If they have equity in their property, they can use some of this equity as collateral on a new loan and they may use it for a further advance on their mortgage, paying the money off over the term of their existing mortgage which is usually in the longer term. They may also choose to take out a secured loan that, although separate to their mortgage, enables them to potentially borrow a considerable sum of money for personal use and pay it off in the medium term.

Tenants do not have these options as they do not own their own home and so cannot use their property as collateral in a new loan. There are still plenty of lenders that they can apply to however but they need to be realistic about their financial circumstances before choosing which lender to go with to avoid being disappointed or worse, to be charged higher rates of interest than may otherwise be the case.

When applying for unsecured loans and tenant loans, you should always be honest about your credit history. When you make an application for finance, the lender will ask your permission to make a credit search on you. What this means is that they will go to one of the large credit reference agencies to check your credit file. Every time you apply for finance, a new entry is made on your credit file and if you make lots of credit applications over a short period of time, it may actually harm your chances of being accepted for a loan because it suggests to the lender that you are being a little reckless and are a potentially higher risk than another person who is more measured about their approach for finance.

Your record will also show your repayment record and how many times you have fallen into arrears, defaulted or gained a CCJ for non repayment of credit. This file enables the lender to gauge the risk they face in lending money to a potential borrower and is impossible to fake so there is no point in not telling the truth about your past and refusing permission for the lender to check your file will almost always render your application null and void.

If you’re after that spanking new car, unsecured loans and tenant loans are perfect to help you get the finance you need so they’re always worth considering if you need to raise the money. Just remember to pick a lender that specialise in helping tenants with your financial circumstances as some concentrate on people with very lean credit files and others help people with lots of adverse credit and always be honest as it will work in your favour in the long run. Happy hunting!

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Andy Silk is FinanceGuru for FeelGoodLoans.co.uk, specialists in tenant loans, loans and mortgages for UK homeowners and business owners.

Tags: what this means, taking the time, enquiry, sum of money, financial circumstances, collateral, buying a new car, secured loan, unsecured loans, credit history, existing mortgage, credit reference agencies, set of wheels, cred, tenant loans, loans for tenants, credit search